If many work-from-home opportunities seem too good to be true, that’s because they probably are. And the Federal Trade Commission put an end to two companies that allegedly scammed millions of dollars from consumers by promising substantial income through home-based businesses.
The FTC announced Tuesday it settled two cases involving schemes that targeted consumers who hoped to succeed through home-based businesses.
One case, brought by the FTC and the New York and Florida Attorneys Generals, accused the operators of The Tax Club of selling services by allegedly falsely claiming they would help consumers succeed in their at-home businesses.
According to the FTC complaint, the company called consumers and falsely claimed to be affiliated with companies that consumers had already bought services or products from. The company’s telemarketers allegedly pitched business development services such as business coaching services, corporate formation services, and credit development services, falsely claiming the services were essential to the success of consumers’ businesses.
After the initial sale, the company allegedly called consumers numerous times to sell more “essential” services to the tune of several thousand dollars through a large initial fee and recurring smaller monthly membership payments.
Under the settlement with the FTC, The Tax Club operators must pay a fine of $15.6 million by surrendering assets. The company and its operators are banned from selling business coaching services and work-at-home opportunities in the future.
In a second settlement announced Tuesday, the American Business Builders resolved charges that it falsely sold a home-based business opportunity where consumers could earn income offering payment processing services, credit card terminals and merchant cash advances to small businesses.
According to the FTC complaint, the company allegedly falsely claimed that for a fee, ranging between $295 to $495, consumers could make substantial income by earning commissions on terminals sold or leased to merchants in the community.
The company also allegedly sold leads and promised to conduct telemarketing campaigns that would generate customers and income. Leads were sold for $10, with some consumers paying up to $40,000 without earning any income.
Under the settlement, the operators of American Business Builders must pay a fine of $5.4 million, which will be suspended upon surrender of bank accounts and real and personal property.
The operators and affiliated businesses are banned from misrepresenting that consumers are likely to earn money and misrepresenting any material fact about a product or service. The defendants also are barred from selling or otherwise benefitting from consumers’ personal information, and failing to properly dispose of customer information.
Tuesday’s settlements are part of the federal-state crackdown on scams that falsely promise jobs and opportunities to “be your own boss.”