Agencies cracking down on scams

The government announced a crackdown yesterday on more than 200 scam operations that offered lucrative — and false — work-at-home scams and other questionable business opportunities.

“Scam artists have a choice,” said Deborah Platt Majoras, chairman of the Federal Trade Commission, one of the agencies spearheading the crackdown. “Get out of the fraud business and stay out or you, too, will have an opportunity of a lifetime: Doing time behind bars.”

Targets of “Project Biz Opp. Flop,” an effort among the FTC, Justice Department, U.S. Postal Inspection Service and law-enforcement agencies from 14 states, include a DVD rental vending-machine company, a medical billing work-at-home opportunity, a work-at-home opportunity involving the assembly of kitty cat refrigerator magnets and an envelope-stuffing program.

Consumers in the cases brought by the FTC have lost more than $100 million.

Consumers filed more than 14,000 complaints about business opportunity programs — which attract customers by promising to earn big money for a minimal amount of work — and an estimated 950,000 incidents of business opportunity fraud occurred in the United States last year, according to the FTC.

One of the cases being prosecuted in the Southern District Court of Florida is against American Entertainment Distributors, which the agency says charged customers between $28,000 and $37,500 for one DVD vending machine and promised large earnings and location assistance.

The amount of money an individual person invests in a single business opportunity program can range from $50 to $40,000, Ms. Majoras said.

The cases resulting from the sweep include criminal prosecutions, civil-enforcement actions filed by the FTC, civil penalty actions filed by the Justice Department on behalf of the FTC and enforcement actions filed by state-enforcement agencies.

Since January 2004, 111 enforcement actions have been filed in 14 states, including 15 in Maryland. None have been filed in Virginia and the District.

The FTC announced 16 new federal cases yesterday against 31 corporate defendants and 33 individual defendants.

A majority of the federal and state cases are in Florida, which is a hotbed for business-opportunity programs because of the state’s high population of senior citizens and immigrants, who with college students are often the targets of such programs, according to Marcus Jimenez, U.S. attorney for the Southern District of Florida.

The 15 cases being prosecuted by the Maryland Attorney General’s Office pertain to businesses in Florida, Texas, Pennsylvania, New Jersey, Maryland, Alabama, Minnesota, New York and Canada. Businesses include Lady of America Franchise Corp., Dryclean Depot and Hollywood Tanning Systems.

The FTC has created a “teaser” Web site — sites used by business opportunity programs used to entice consumers — advertising a fake ice cream sundae vending machine business to educate the public about how to spot fraudulent claims.

The FTC says consumers should be wary of ads that promise to make lots of money for doing little work, read all disclosure documents before signing a contract and talk to current investors before investing money.