A crackdown on get-rich-quick schemes, code-named “Operation Missed Fortune,” has resulted in 75 enforcement actions in 25 states, the Federal Trade Commission said Wednesday.
The variety of fleecing operations is staggering: a sports card broker, espresso coffee bars in supermarkets, a pyramid plan “to help needy children,” display racks for toys.
One man paid $11,500 for five coin-operated telephones on a promise of $200 a month income from each. He lost money instead.
The list also includes an offer for “business opportunities to sell advertising space on directory boards placed in hotel lobbies.” Cost to the investor: $30,000 for three boards.
Another promised consumers they could use their home computers to earn up to $23,000 a year working only 28 minutes a day processing insurance claims for doctors.
Mark J. Griffin, president of North American Securities Administrators Association, described a Baltimore advertisement for a seminar “where it would be explained how one could make in excess of $200,000 a year restocking stores with Coca-Cola, Disney, and Warner Bros. products.”
All that was required, he said, was an up-front investment of $17,500 to $53,000. The operation was shut down by the Maryland Securities Division before anyone was hurt.
“Unfortunately, too often people are hurt,” Griffin said. “Such as the Madison, Wis., couple who were conned into believing they could make $97,000 a year selling water purification equipment.”
All 75 cases involved civil, not criminal, enforcement actions such as cease-and-desist orders, said Eileen Harrington, associate director of FTC’s consumer protection bureau.
Robert M. Burke Jr., of Bergen County, N.J., told a news conference of buying the five coin-operated telephones and paying $8,800 for them, plus $2,750 to have them installed.
“I lost money each and every month that my phones were in place,” he said. One phone lost $83.60 in one month. The best performance, he said, was a $59.49 profit one month. He removed the phones and they “are currently uninstalled in my basement and earning no income.”
Steve Bellissimo, 42, of New York City, answered a small ad for a business selling physician-ordered hospital beds, wheelchairs and the like to Medicare patients. The franchiser said he had a way to collect reimbursement quickly from the government. The startup cost was $54,000, including a $25,000 fee to the franchiser.
“We lost about $74,000,” Bellissimo said. “We owe thousands of dollars to equipment vendors, we don’t have the funds to do advertising, we are not making any sales of equipment.”
sponsored Jargon is confusing, by definition. And the financial world has its own set of cryptic words.