In a major victory for consumers, the Federal Trade Commission announced on Tuesday that it won a hefty court judgment against four companies that allegedly defrauded 1 million consumers out of more than $450 million.
"The FTC believes that this is one of the largest consumer protection cases in the agency's history," wrote FTC spokesman Frank Dorman in an email to The Huffington Post.
The alleged scams are frustratingly familiar -- a company offers a get-rich-quick scheme that not only fails to deliver, but also hits the buyer with all sorts of hidden fees. In this case, for $39.95, consumers could learn how to make millions in real estate and Internet-based deals.
"A typical consumer can easily, quickly and 'magically' earn thousands of dollars per week simply by purchasing and using" the system, boasted an informercial for "Jeff Paul's Shortcuts to Internet Millions," one of the three informercial-based scams indicted by the FTC. Except that fewer than 1 percent of consumers who purchased the system made any profit, according to the court findings.
But the scam didn't stop there. After purchasing the system, consumers were automatically -- and unknowingly -- enrolled in a "continuity program" that charged an additional $39.95 per month. By signing up buyers for the costly program without the consumer's consent, the companies violated the FTC Act and the Telemarketing Sales Rule.
More than 50,000 consumers paid up to $14,995 for "personal coaching services" that the companies claimed would increase the consumers' likelihood of making big bucks off their investments, according to the FTC. Instead, nearly all of the consumers who purchased the additional coaching programs lost money.
In addition to "Jeff Paul's Shortcuts to Internet Millions," the two other informercial-based scams identified in the case are "John Beck's Free & Clear Real Estate System," and "John Alexander's Real Estate Riches in 14 Days." A quick Google search of any of these three phrases produces a long list of consumer complaints, including the Better Business Bureau's "F" ratings for Jeff Paul's, John Beck's and John Alexander's companies.
The FTC is seeking to collect $450 million from the companies that operated the scams. Lawyers representing the companies could not be immediately reached for comment.
If you think you've been a victim of a scam -- whether these or other scams -- you can file a complaint here with the FTC.
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By Loren Berlin Posted: 05/ 1/2012 2:46 pm Updated: 05/ 1/2012 4:10 pm