Cooper joins nationwide crackdown on business opportunity rip offs
Release date: 3/2/2011
State attorneys general, federal officials announce Operation Empty Promises
Raleigh: Attorney General Roy Cooper today joined state attorneys general from across the country and the Federal Trade Commission to announce a national sweep targeting business opportunity scams, including actions against four companies that have targeted North Carolina consumers.
“When jobs are scarce, claims to help people make money fast become plentiful,” Cooper said. “Consumers think they’re buying into a great way to earn a living, but they could end up paying far more than they’ll ever make.”
In challenging economic times, many people in the state are looking for work. Unfortunately, sometimes they find scams instead of legitimate opportunities. Complaints to the Attorney General’s Consumer Protection Division about business opportunity, work-at-home schemes, and other employment related scams were up 11 percent last year, from 177 complaints in 2009 to 197 complaints in 2010.
Operation Empty Promises
is a national sweep by the FTC, Cooper and other state attorneys general aimed at stopping business opportunity scams and educating consumers about how to avoid them. Announced as part of the sweep are actions taken by Cooper’s Consumer Protection Division against four companies:
- The Beacon Project, Creative Marketing Solutions, Universal Placement Services, and Marilyn Broerman of Charlotte sold plastic countertop candy dispensers and coached people on starting their own candy vending business. The companies lured consumers with promises such as “Make $3,000 a week cash forever!” They told vendors to say that the money collected would be used to help find missing children, but it appears that all money from the sale of the dispensers went to the defendants and money from the sale of candy went to the individual vendors. Cooper filed suit against the defendants on February 28, 2011 for unfair and deceptive trade practices, seeking a permanent ban on their work. The suit asks the court to make the companies pay civil penalties and appropriate consumer refunds and give up illegal profits.
- StoresOnline and iMergent sell software that the companies claim will help people set up successful online businesses. But many consumers who paid thousands of dollars said they were not able to use the software and did not get the help they were promised. Cooper won a consent judgment with the Utah companies in August of 2008. A year later, a judge found the companies in contempt and ordered them to pay consumer refunds but the defendants appealed. Under an agreement worked out by Cooper’s office in March of 2010, North Carolina consumers who paid StoresOnline and iMergent have gotten $1.3 million of their money back.
- Clean Sweeps Holdings of Raleigh allegedly sold sweepstakes machines to consumers in California, Florida, Georgia, Illinois, Louisiana, Maryland, Michigan, Ohio and other states, according to consumer complaint. In complaints filed with Cooper’s office, buyers said they paid for the machines and agreed to pay the company a percentage of their proceeds to place and manage the equipment. Consumers say the company advertised on Christian radio and spoke to churches, promising that anyone who bought in would make their money back within a year or get a refund. But those who paid Clean Sweeps say it never placed the sweepstakes machines and failed to provide refunds as promised. The Attorney General’s Consumer Protection Division is currently investigating Clean Sweeps.
- Fortune Hi Tech Marketing claims that people who buy into its business earn thousands of dollars a year. Based on consumer complaints, Cooper’s office launched an investigation into FHTM in mid 2010. Consumers say they paid money to the company but were only able to make money by recruiting others into the scheme, not by selling any actual goods or services. A total of 25 consumers have now complained about FHTM, and Cooper’s office is investigating the company. Although this case is currently under investigation, it’s important for consumers to know that a pyramid scheme is a violation of the law and is defined as any plan in which a participant pays money for the chance to receive money upon the introduction of new participants into the program.
“We’re looking closely at business opportunities that seem to offer false hopes, and also reaching out to educate consumers on how to recognize and avoid fraud,” Cooper said.
Later this month, Cooper’s office plans to launch a tool kit to educate consumers on fake business opportunities which will include print, web and video materials. The goal is to prevent North Carolina consumers from losing their hard-earned money to scammers trying to take advantage of a tough employment market.
“Don’t let scammers use empty promises of jobs with high earnings to take your money,” Cooper warned consumers. “Before you agree to invest in any business, check it out thoroughly and always be skeptical of claims of guaranteed profits.”
Cooper has taken action against a number of other kinds of scams fueled by hard times. For example, his Consumer Protection Division has won 13 cases against foreclosure assistance and loan modification scams in the past five years, including two so far in 2011.
Contact: Noelle Talley (919) 716-6413