Feds Target Online Business Scams

A combined federal-state task force announced Tuesday a law enforcement sweep targeting bogus business opportunities and work-at-home scams, including several Internet operations.

Dubbed Project FAL$E HOPE$, the crackdown includes more than 100 law enforcement actions by the Department of Justice (DoJ), the Federal Trade Commission (FTC), the U.S. Postal Service and 11 state agencies. The FTC consumers lost more than $30 million in just four cases alone.

Assistant Attorney General Peter D. Keisler said the ongoing law enforcement action so far this year has resulted in 23 fraud convictions and the sentencing of 25 individuals to more than 160 years of prison time.

Keisler and FTC Chairman Deborah Platt Majoris said Tuesday’s action includes new cases, developments in existing cases, criminal convictions and state actions, as well as new educational materials for consumers.

Among the new cases, the DoJ and the FTC brought charges against two alleged Internet scams, the Results Group and Money Making Secret.

The FTC charged the Phoenix-based Results Group with charging $99 to $599 to build and host Web sites “affiliated” with the Web sites of Internet retailers such as Amazon and Overstock. The retailers, however, had no knowledge of the affiliates and paid no commissions.

The FTC charged the Results Group with falsely saying that customers would receive “substantial” income and expert advice from the retailers in addition to using false and misleading statements and advertising.

Federal authorities also charged Money Making Secret with making false and unsubstantiated claims in charging customers $47-$129 to access a site offering “Top 12 Programs to Make Big Money.”

The Internet-based programs were varied, including online survey programs, free government grant money programs, mystery shopper programs and online data-entry programs.

The FTC claims the programs did not exist and did not offer “quick and easy money” as promised.

“When the states and the federal government, civil and criminal enforcers, all work together — sharing information, partnering resources, and coordinating our efforts — we can make very significant progress against these unlawful businesses,” Keisler said in a statement.

The FTC also announced further action in cases already brought against alleged Internet scammers, including winning summary judgments against Network Services Depot, Sun Ray Trading and the Internet Marketing Group.

Network Services Deport offered Internet kiosk business opportunities. The court found the defendants liable for violations of the FTC Act and federal franchising laws.

Principle operators Charles Castro and Gregory High were held personally liable for restitution.

A judgment was also entered against Sun Ray Trading, which sold fraudulent work-at-home envelope stuffing schemes through spam and multiple Internet sites. The judgment bars two defendants from making future misrepresentations.

As a result of CAN SPAM Act violations, the defendants are required to turn over frozen assets.

The Internet Marketing Group offered phone cards and Internet kiosk opportunities. The settlement prohibits future misrepresentations and violations of the FTC Act, the Franchise Rule and the Do Not Call provisions of the Telemarketing Sales Rule.

The corporate defendants turned over all of their remaining assets and two individual defendants paid more than $197,000.

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