Federal, State Agencies Target Bogus Businesses

InsideIndianaBusiness.com Report

12/13/2006 1:09:56 PM

The California Department of Corrections, several federal agencies and ten states, including Indiana, are launching a sweep to stop bogus business opportunities and work-at-home scams. The Federal Trade Commission says if a business opportunity promises no risk, little effort and big profits, it is most likely a scam. Businesses in Indiana that have been targeted include an online company, a candle company and a health care business.
 

Source: Inside INdiana Business

Press Release

SACRAMENTO, Calif.--The California Department of Corporations (DOC) announced today Project FAL$E HOPE$, a state and federal sweep by regulators and law enforcement agencies targeting bogus business opportunities and work-at-home scams. The crackdown includes more than 100 law enforcement actions by state and federal agencies in 11 states, including the California Department of Corporations, the Federal Trade Commission (FTC), the U.S. Department of Justice, and the U.S. Postal Inspection Service. In California the DOC initiated enforcement actions against illegal franchise businesses that offered or sold business operations for hypo-allergenic cats, home delivery of pet products, rental of margarita machines, mall coffee kiosks, blended juice cafes, health fitness and nutrition centers, among others.

“The registration requirement of California’s Franchise Investment Law helps prevent misappropriation, mismanagement, and misrepresentation in connection with the offer and sale of franchises,” said California Corporations Commissioner Preston DuFauchard. “By forming inter-agency alliances, we can strengthen our enforcement efforts and protect the public from the sale of unregistered franchise businesses.”

“Bogus business opportunities trample on Americans’ dreams of financial independence,” said FTC Chairman Deborah Platt Majoras. “If a business opportunity promises no risk, little effort, and big profits, it almost certainly is a scam. These scams offer only a money pit, where no matter how much time and money is invested, consumers never achieve the riches and financial freedom promised.”

Project FAL$E HOPE$ includes actions by DOC and other states, new cases announced yesterday by federal law enforcement in addition to developments in existing cases, and criminal convictions, as well as new education materials for advertising sales staff on screening ads for bogus business opportunities. (The State Enforcement List is attached.)

A new guide for publishers offers them help to screen out deceptive ads for business opportunities. The alert, “Ads for Business Opportunities: How to Detect Deception,” suggests advertising sales staff to give an extra look at ads that make claims such as:

--No risk! Guaranteed
--Quick and Easy!
--Earn $2,000 a month

The alert warns that legitimate business ventures involve risks, start-up businesses require a lot of work to get off the ground, and that the law requires earnings claims in ads be accompanied by the number and percentage of previous purchasers who achieved the income. (Visit www.corp.ca.gov to view the guide.)

California leads the nation in franchised businesses, encompassing more than 80,000 businesses that provide 2 million jobs and produced economic output worth $187 million, according to a 2004 report by the International Franchise Association Educational Foundation.

The Department of Corporations is California's investment and financing authority and is responsible for the regulation, enforcement, and licensing of securities, franchises, off-exchange commodities, investment and financial services, independent escrows, consumer and commercial finance lending, residential mortgage lending, payday lenders, check sellers, bill payers, and debt reduction services. Consumers should contact the department to check on the status of the companies, investments or other services they are considering and the licensing status of the person. Contact the Department of Corporations toll-free Consumer Resource Center at 1-866-ASK-CORP (1-866-275-2677) or visit its Web site at www.corp.ca.gov.

STATE ENFORCEMENT LIST

Arizona

1. The Results Group, LLC, Edward Longoria, Amber Halverson,
Arizona parties, lawsuit filed alleging violations of
Arizona Consumer Fraud Act, Arizona Attorney General
(11/29/06)

California

2. The Pet Pantry International, Inc. and Pet Products
Delivery, Inc., Nevada parties, Desist and Refrain Order,
California Department of Corporations (4/3/06)


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