Home Professions, Inc., Telesalescenter.Com., and their owner, Michael Petok, charged by the Federal Trade Commission as part of a nationwide crackdown on fraudulent business opportunities, have agreed to pay $27,647 to settle the charges against them. The FTC had filed a complaint in federal district court alleging that the defendants operated a fraudulent work-at-home medical billing business opportunity. The FTC alleged that the defendants misrepresented the earnings consumers could realize, the ease of signing up doctors as clients, the utility of their medical billing software, and the availability of a money back guarantee. Under the settlement, the defendants are banned from the medical billing and work-at-home industries.

The settlement announced today ends the litigation in this case, which was among 35 cases brought by the FTC and the Department of Justice as part of "Project Biz-illion$," a multi-prong state/federal attack on traditional business opportunity scams. This case, like most of "Project Biz-illion$" actions, was launched against defendants that advertised in the classified section of daily newspapers to peddle work-at-home scams. The FTC's complaint named Home Professions, Inc., Telesalescenter.Com, based in San Juan Capistrano, California, and Michael Petok, doing business as Nationwide Medical Billing, ProClaim Software, and OptiMed (collectively referred to as "Home Professions"). According to the FTC, the defendants made unsupported earnings claims, provided consumers with faulty software that was incapable of processing medical billing claims, falsely promised consumers that they had a list of doctors who were ready to hire the defendants' customers to process their medical claims, and misrepresented their refund policy. A minimum investment ranging from $299 to $599 was required and the defendants' ads typically stated that consumers would make "From $24K to $50K+ per year."

Under the settlement, which required the court's approval, the defendants are banned from any future involvement in the sale of medical billing or other work-at-home business opportunities, and are prohibited from misrepresenting any fact material to a consumer's decision in connection with the sale of any goods or services. The settlement requires the defendants to provide notice of the settlement to all customers who are currently making payments under existing contracts and to allow those customers to rescind their contracts. In addition, the settlement requires the defendants to pay $27,647, with an avalanche clause that would require them to pay $2.9 million in the event they are found to have made omissions or misrepresentations about their financial condition. Finally, the settlement contains various recordkeeping and reporting requirements designed to assist the FTC in monitoring the defendants' compliance.

The Commission vote authorizing staff to file the proposed settlement was 5-0. The stipulated judgment and order for permanent injunction was filed in the U.S. District Court for the Central District of California, Southern Division, on January 26, 2001, and the court approved it on January 29

NOTE: This stipulated judgment and order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent judgments have the force of law when signed by the judge.

Copies of the news release and the stipulated judgment are available from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. Copies of other documents associated with "Project Biz-illion$" are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form. The FTC enters Internet, telemarketing and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies worldwide.

Media Contact:

Office of Public Affairs
202-326-2180  

Staff Contact:

Rolando Berrelez or Theresa McGrew
FTC Midwest Regional Office - Chicago
312-960-5634

(FTC Matter Mo. X000049) (Civil Action No. SACV OO-111AHS (EEx)

A company and its owner, accused of tricking consumers into paying for an envelope-stuffing business opportunity, are banned from selling any work-at-home business opportunities again. The Federal Trade Commission alleged that they falsely promised that they would pay consumers $7 per envelope stuffed and that consumers would earn a substantial income. The operation will pay $287,500 to settle the FTC’s charges.

The FTC charged that the Walnut, California company and owner advertised the envelope stuffing opportunity through classified ads in newspapers and on the Internet. Ads claimed consumers would “make $7 for each and every envelope which you secure, stuff, and mail….” Consumers were told that for their $40 “registration fee” they would get everything they needed, and that the money would be refunded after the first 100 envelopes. However, according to court documents filed by the FTC, after sending in the fee, consumers discovered that the company did not supply envelopes or pay them for stuffing envelopes. Instead, the defendants directed consumers to start their own work-at-home envelope-stuffing scam and find other people to pay them $7, by buying their own newspaper ads similar to the ad to which they had responded.

To settle the FTC’s charges, the defendants are banned from selling work-at-home opportunities, and prohibited from making false or misleading material representations about any good or service. The court order enters a monetary judgment of $1,710,511, partially suspended based on the defendants’ sworn financial disclosure documents. The defendants will pay $287,500. The full judgment will be due if the defendants fail to pay or if they misrepresented their financial status. The court filed the order against Group C Marketing, Inc., doing business as HBG Publications, and Satinderjit Singh Chaddha, the company’s sole officer and director.

The Commission vote to authorize staff to file the stipulated final order was 5-0. The stipulated final order for permanent injunction was filed in the U.S. District Court for the Central District of California.

NOTE: This stipulated final order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. A stipulated final order requires approval by the court and has the force of law when signed by the judge.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://ftc.gov/bcp/consumer.shtm.

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Bogus California Operation Targets Hispanic Consumers with Work at Home Opportunity Scam

A Los Angeles-based operation has been cited by the Federal Trade Commission with perpetrating a classic work-at-home scam. USS Elder Enterprises, Inc., America Vespucia Corporation, Ricardo Elder Partners, Inc., and Ricardo E. Gonzalez, doing business under a series of fictitious names and operating as a common enterprise, targeted Spanish-speaking consumers looking for well-paying jobs that do not require English skills. The FTC alleges that the defendants, through ads in various Spanish-language newspapers and magazines, offered easy product assembly work, such as key chains or jewelry, and high weekly earning potential. Interested consumers were led to believe that they could earn between $112 and $700 a week for such work. The FTC alleges that the defendants’ business practices violated the FTC Act and the Telemarketing Sales Rule (TSR). The FTC’s complaint names: USS Elder Enterprises, Inc. and America Vespucia Corporation, both doing business as Salomon Press Financial Publications, Salomon Press, Editorial Salomon, Compañía Americana, Compañías Americanas, and Escritorio Público Internacional; Ricardo Elder Partners, Inc., doing business as Escritorio Público Internacional; and Ricardo E. Gonzalez, also known as Ricardo Elder. According to the complaint, the defendants promote their phony work-at-home business opportunities to consumers throughout the United States, specifically targeting Hispanic consumers. The ads refer consumers to telephone numbers for additional information. When consumers call these numbers, they are told that, for a fee ranging from $50 to $180, the consumers will receive assembly product work for pay, or substantial assistance in obtaining such work, and that they could potentially earn a substantial amount of money, depending on their ability and the products they choose. Some consumers are told that, if they are not fully satisfied with the assembly projects, the defendants will refund their money. In other cases, the defendants promise consumers that their money would be refunded after a trial period. Consumers are instructed to send their payment in cash, by money order, or by wire transfer. Occasionally, the defendants’ representatives personally collect the money from consumers’ homes. According to the complaint, however, consumers who pay the fee do not receive the promised assembly project work or substantial assistance getting such work. Few, if any, realize the promised earnings. Instead, according to the FTC, consumers receive a booklet in Spanish that contains lists of companies to contact that allegedly offer work-at-home opportunities. These companies no longer exist; they require payment of additional fees; or they have no relationship with the defendants. When consumers complain and request a refund, their efforts are thwarted by the defendants who simply do not respond, or place conditions on receiving a refund that have not been previously disclosed to consumers. Specifically, the complaint alleges that the defendants misrepresented: that consumers will obtain assembly project work for pay or substantial assistance in obtaining such work; that consumers are likely to earn a substantial amount of money; and that the defendants will provide refunds to consumers. The FTC is seeking preliminary and permanent injunctive relief and consumer redress. The Commission vote authorizing staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court, Central District of California, Southern Division, on August 31, 2004. The FTC would like to thank the Better Business Bureau of the Southland, Inc. and the Los Angeles, California Department of Consumer Affairs for their valuable contributions to the FTC's investigation. NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court. Copies of the complaint are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad. Media Contact: Brenda Mack Office of Public Affairs 202-326-2182 Staff Contact: Barbara Anthony, Robin E. Eichen or Elvia Gastelo FTC’s Northeast Region - New York 212-607-2829 (FTC File No. 032-3128) (Civil Action No. SA CV-04-1039 AHS (ANx))

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Work-at-Home Schemes

Be part of one of America's Fastest Growing Industries!

Earn thousand of dollars a month - from your home - Processing Medical Billing Claims.

You can find ads like this everywhere - from the street light and telephone pole on your corner to your newspaper and PC. While you may find these ads appealing, especially if you can't work outside your home, proceed with caution. Not all work-at-home opportunities deliver on their promises.

Many ads omit the fact that you may have to work many hours without pay. Or they don't disclose all the costs you will have to pay. Countless work-at-home schemes require you to spend your own money to place newspaper ads; make photocopies; or buy the envelopes, paper, stamps, and other supplies or equipment you need to do the job. The companies sponsoring the ads also may demand that you pay for instructions or "tutorial" software. Consumers deceived by these ads have lost thousands of dollars, in addition to their time and energy.

Classic Work-at-Home Schemes

Several types of offers are classic work-at-home schemes.

Medical billing. Ads for pre-packaged businesses - known as billing centers - are in newspapers, on television and on the Internet. If you respond, you'll get a sales pitch that may sound something like this: There's "a crisis" in the health care system, due partly to the overwhelming task of processing paper claims. The solution is electronic claim processing. Because only a small percentage of claims are transmitted electronically, the market for billing centers is wide open.

The promoter also may tell you that many doctors who process claims electronically want to "outsource" or contract out their billing services to save money. Promoters will promise that you can earn a substantial income working full or part time, providing services like billing, accounts receivable, electronic insurance claim processing and practice management to doctors and dentists. They also may assure you that no experience is required, that they will provide clients eager to buy your services or that their qualified salespeople will find clients for you.

The reality: you will have to sell. These promoters rarely provide experienced sales staff or contacts within the medical community.

The promoter will follow up by sending you materials that typically include a brochure, application, sample diskettes, a contract (licensing agreement), disclosure document, and in some cases, testimonial letters, videocassettes and reference lists. For your investment of $2,000 to $8,000, a promoter will promise software, training and technical support. And the company will encourage you to call its references. Make sure you get many names from which to chose. If only one or two names are given, they may be "shills" - people hired to give favorable testimonials. It's best to interview people in person, preferably where the business operates, to reduce your risk of being mislead by shills and also to get a better sense of how the business works.

Few consumers who purchase a medical billing business opportunity are able to find clients, start a business and generate revenues - let alone recover their investment and earn a substantial income. Competition in the medical billing market is fierce and revolves around a number of large and well-established firms.

Envelope stuffing. Promoters usually advertise that, for a "small" fee, they will tell you how to earn money stuffing envelopes at home. Later - when it's too late - you find out that the promoter never had any employment to offer. Instead, for your fee, you're likely to get a letter telling you to place the same "envelope-stuffing" ad in newspapers or magazines, or to send the ad to friends and relatives. The only way you'll earn money is if people respond to your work-at-home ad.

Assembly or craft work. These programs often require you to invest hundreds of dollars in equipment or supplies. Or they require you to spend many hours producing goods for a company that has promised to buy them. For example, you might have to buy a sewing or sign-making machine from the company, or materials to make items like aprons, baby shoes or plastic signs. However, after you've purchased the supplies or equipment and performed the work, fraudulent operators don't pay you. In fact, many consumers have had companies refuse to pay for their work because it didn't meet "quality standards."

Unfortunately, no work is ever "up to standard," leaving workers with relatively expensive equipment and supplies - and no income. To sell their goods, these workers must find their own customers.

Questions to Ask

Legitimate work-at-home program sponsors should tell you - in writing - what's involved in the program they are selling. Here are some questions you might ask a promoter:

• What tasks will I have to perform? (Ask the program sponsor to list every step of the job.)
• Will I be paid a salary or will my pay be based on commission?
• Who will pay me?
• When will I get my first paycheck?
• What is the total cost of the work-at-home program, including supplies, equipment and membership fees? What will I get for my money?

The answers to these questions may help you determine whether a work-at-home program is appropriate for your circumstances, and whether it is legitimate.

You also might want to check out the company with your local consumer protection agency, state Attorney General and the Better Business Bureau, not only where the company is located, but also where you live. These organizations can tell you whether they have received complaints about the work-at-home program that interests you. But be wary: the absence of complaints doesn't necessarily mean the company is legitimate. Unscrupulous companies may settle complaints, change their names or move to avoid detection.

Where to Complain

If you have spent money and time on a work-at-home program and now believe the program may not be legitimate, contact the company and ask for a refund. Let company representatives know that you plan to notify officials about your experience. If you can't resolve the dispute with the company, file a complaint with these organizations:

• The Federal Trade Commission works for the consumer to prevent fraud and deception. Call 1-877-FTC-HELP (1-877-382-4357) or log on to www.ftc.gov.
• The Attorney General's office in your state or the state where the company is located. The office will be able to tell you whether you're protected by any state law that may regulate work-at-home programs.
• Your local consumer protection offices.
• Your local Better Business Bureau.
• Your local postmaster. The U.S. Postal Service investigates fraudulent mail practices.
• The advertising manager of the publication that ran the ad. The manager may be interested to learn about the problems you've had with the company.

For More Information

The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit www.ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.