Markets Wired

About two-thirds of Spanish-language ads for work at home opportunities were potentially deceptive, out of the more than 300 found by the Federal Trade Commission and partners during a two-day surf of Internet and print advertisements. At the FTC’s request, a federal district court has halted the allegedly deceptive claims of one business, which was advertising an envelope stuffing business opportunity, falsely promising a substantial income and payment of $17.50 for each envelope that consumers stuffed. FTC staff has been working with Spanish-language media on identifying potentially fraudulent advertising claims for work at home opportunities and other ad types.

“Ads promising big earnings by working from your home can look very attractive to many consumers,” said Lydia Parnes, Director of the FTC’s Bureau of Consumer Protection. “But, we know that most of the promises never come true and the opportunities never pay off. The FTC is using every tool in its arsenal, including law enforcement, education, and media monitoring, to protect consumers from these types of scams.”

AD SURF

Fourteen organizations worked with FTC staff on January 21 and January 24, 2007 to find Spanish-language advertisements for work-at-home opportunities that appeared potentially deceptive. They found 314 ads; 68 percent appeared to be deceptive. Based on the FTC’s past experience with fraud, staff identified ads as potentially deceptive if they: included specific earnings claims; represented that the opportunity was “no risk”; or offered the types of work-at-home opportunities that are fraudulent in many cases – craft assembly and envelope stuffing. Of the ads, 41 percent offered specific earnings claims, 21 percent offered either craft assembly or envelope stuffing, and 4 percent stated that the opportunity was “no risk.” In addition, even though many of these programs require an up-front fee for work, only 6 percent of the ads mentioned a fee in the ad.

The FTC’s report states, “It is unlikely that these advertisements would deliver on their promises of quick and easy money. They may offer programs that do not actually exist or fail to disclose that consumers will have to work many hours without pay, frequently at significant personal cost.” The report concludes, “The high incidence of potentially deceptive advertisements in this sample suggests that work-at-home scams are pervasive in Spanish-language media.”

Partners assisting with the surf included staff from the United States Postal Inspection Service, Council of the Better Business Bureau, Manos Latinas…Manos Amigas/Latin Hands, Friendly Hands/Kino Weed & Seed, Better Business Bureau of Southern Arizona, Better Business Bureau of San Diego and Imperial Counties, Better Business Bureau of Denver; Better Business Bureau of Atlanta, Better Business Bureau of Central Indiana, Massachusetts Office of the Attorney General, Nebraska Attorney General’s Office, Better Business Bureau of Eastern North Carolina, North Carolina Department of Justice, Oregon Department of Justice, Puerto Rico Department of Consumer Affairs, and División Protección al Consumidor, Superintendencia de Industria y Comercio, Colombia. Partners collected ads from 16 states: Arizona, California, Florida, Georgia, Illinois, Indiana, Maryland, Massachusetts, Kentucky, New York, North Carolina, Ohio, Oregon, Texas, Virginia, and Wisconsin, as well as Puerto Rico and Washington, DC.

ENVELOPE STUFFING SCHEME

The FTC today is announcing a new law enforcement action against an alleged work-at-home scam. The operation placed classified advertisements for an envelope stuffing opportunity nationwide, including in Spanish-language newspapers, promising consumers a substantial income and directing them to call a toll-free number or visit a Web site. Statements from the defendants said that consumers would be paid at least $17.50 for each envelope they stuffed, and guaranteed consumers a weekly paycheck of up to $1,400, or more.

One ad stated:

$1400/week stuffing envelopes @ home!
Easy work, awesome income, FT/PT,
No experience necessary. $200 Cash Hiring Bonus!

However, according to the FTC, after consumers paid a $45 “registration deposit,” most consumers never heard from the company again. Other consumers were ultimately told by the defendants that the only way to earn the promised money was to replicate the fraudulent envelope-stuffing scheme by making the same false claims to other consumers.

The federal district court judge ordered an ex parte temporary restraining order and asset freeze. The FTC ultimately seeks to permanently bar them from further violations and make them forfeit their ill-gotten gains.

The FTC’s complaint names Integrity Marketing Team, Inc., Byron C. Peterson, and Min Sung Kim, doing business as Home Business System, as defendants and charges that they misrepresent that consumers who participated in their envelope stuffing opportunity are likely to earn substantial income, and that they would pay consumers at least $17.50 for each envelope the consumers stuff.

The Commission vote to authorize staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Southern District of Florida.

The FTC would like to acknowledge the assistance of the United States Postal Inspection Service offices in Birmingham, Alabama, and Fort Lauderdale, Florida, as well as the Better Business Bureau of South Florida.

LAW ENFORCEMENT UPDATES

Today, the FTC is announcing that Natural Solution, Inc. and its president will pay $3,087,969.06 for making unsubstantiated claims that their liquid dietary supplement is effective in preventing and treating several forms of cancer. The sellers advertised the supplement, Knutric, in Spanish-language infomercials across the country. The ads described Knutric as a combination of 20 plants and six minerals that is effective in preventing and treating numerous serious diseases, including prostate, breast, and colon cancer. The FTC alleged that these claims were not substantiated, and a U.S. District Court in the Central District of California granted the FTC’s motion for summary judgment and entered an order against the defendants. The Court required the defendants, who are now out of business, to notify every customer who purchased Knutric that they did not have scientific evidence to support their cancer treatment and prevention claims. The Court also prohibited Natural Solution, Inc. and president Isabel Mendoza from making unsubstantiated health claims in the future.

The FTC also recently announced a ban for telemarketers accused of promising consumers a MasterCard and promotional gifts, but rarely delivering either. They had to turn over almost all of their assets to the FTC, and are now banned from telemarketing and from selling credit cards and similar products and services. Please see the press release about Remote Response Corporation, dated August 30, 2007.

ADVERTISING SCREENING PRESENTATIONS

To help reduce the number of deceptive ads, FTC staff conducts advertising screening presentations for Spanish-language media outlets. The presentations alert ad sales staff to the telltale signs of deceptive claims for work-at-home businesses, credit scams, and weight-loss products, and offer basic guidance on advertising law. To date, the FTC team has visited with Spanish-language newspapers and radio and television stations in Washington, DC, New York City, Chicago, and Miami.

The FTC’s publication, “Work-at-Home Schemes,” can help consumers learn how to identify and avoid bogus claims in ads for work-at-home opportunities. It is available in English at www.ftc.gov/workathome and in Spanish at www.ftc.gov/trabajoencasa.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://ftc.gov/bcp/consumer.shtm.