My office participated this week in the announcement of Project FAL$E HOPE$, a federal and state law enforcement sweep targeting bogus business opportunities and work-at-home scams.  The crackdown included more than 100 law enforcement actions by the Federal Trade Commission, the Department of Justice, the United States Postal Inspection Service and law enforcement agencies in 11 states.

Scams of this kind are rapidly growing.  Consumers are led to believe it is easy to make thousands of dollars working from home or by working only a few hours per week.  These companies frequently change names and locations, while tricking some investors out of their life savings.  Typically, the companies first sell an opportunity of some sort to a consumer, then later sell “advertising packages” or “enhanced marketing packages” that consumers buy in an effort to protect their initial investments.

The bogus business opportunities targeted in the sweep cases include vending machines, ATM and Internet terminals, display racks for coffee and ink cartridges, Internet-based businesses, envelope stuffing and medical billing.

In Arizona, my office filed a lawsuit against The Results Group (“TRG”), a Phoenix-based company that identified potential customers through “pop-up” ad responses and then contacted those consumers through telemarketing.  TRG claimed that this opportunity was “risk free” and consumers could make anywhere from $1,000 per week to $100,000 per year from its program.

The TRG package was a portal Web site that TRG claimed would serve as a gateway to other commercial Web sites.  TRG told consumers they would earn commissions when Internet users used the portal to access a commercial Web site and then made a purchase.   

TRG charged between $99 and $597 to establish the portal Web site.  When consumers complained that they were not earning the promised commissions, TRG sold “advertising packages” for amounts up to several thousand dollars.  When consumers complained that the advertising packages were ineffective, TRG frequently told them that the refund policy did not apply to the advertising packages.  Hundreds of consumers purchased this program.

In addition to the state lawsuit, the Federal Trade Commission also took action in federal court to stop TRG’s practices.

The FTC and the Arizona Attorney General’s Office are working together to educate consumers about the dangers of business opportunity scams and dissuade consumers from taking the bait.  The Attorney General’s Top 10 Consumer Scams brochure is available at www.azag.gov.  It provides red flags and prevention tips to avoid work-at-home scams.  The FTC has also established a Web site at http://www.ftc.gov/bcp/edu/microsites/bizopps/ for consumers and businesses.

Remember, if it sounds too good to be true, it almost always is. 

Terry Goddard