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Did you receive an email or saw an ad or website that said you could make money working from home? Many, if not the vast majority of these, are flat-out scams. We will explain how these work at home scams work and show you a recent example, "Coaching Department" and its related companies, which the FTC alleges strung people along in a three-part scam that raked in tens of millions of dollars.
How does a typical work at home scam work?
Phase 1 - The Lure and Initial Fee
It started with an email or online search result telling people they could run their own internet business from home. When people clicked through to the company�s sites, they found success stories of people who supposedly made real money with the system, and warnings that the program was quickly filling up. At a cost of less than $100, many people jumped at the chance.
Typical headlines used by the scammers are:
- If You Can Spare 60 Minutes A Day, We Can Offer You a Certified, Proven And Guaranteed Home Job To Make $379/Day From Home!
- �Important: Read my full report now as only 15 people are accepted into this program per city at any given time . . . because of the personal support given to each new member to ensure everyone�s quick financial success. Don�t hesitate . . . this page is taken down (literally) when the limit is reached, so read on . . .
Phase 2 - The Upsale: Coaching
Once people paid and got their work-at-home kit, the next pitch began. For anywhere from $3,000-$12,000 - often depending on a person�s available credit - they could be part of the business coaching program. Not just any program, the company said, but one for select, motivated people that could be �success stories� for marketing materials or infomercials. People �interviewed� for the opportunity would work hand-in-hand with coaches to help them succeed, so they�d easily make enough to pay off their debt in 3-6 months, the company said.
Phase 3 - Add-on Services
After people paid for the coaching program, they were hit up a third time. This time the pitch was for add-on services like website design or accounting services that would ensure success. People wanting to protect their already substantial investments in the company spent thousands more.
But no matter how much people bought or how hard they worked, most didn�t end up with a working online business. Besides making little to no money, they also ended up heavily in debt, the FTC says. The scam ended when people realized they�d been ripped off or reached the limits on their credit cards.
A Recent Example:
FTC Halts Multi-Million Dollar Work-From-Home Business Coaching Scheme - Consumers Lost Thousands of Dollars Each After Being Told They Could Earn Income Through Online Businesses
February 24, 2014
At the Federal Trade Commission�s request, a federal court entered a temporary restraining order halting a deceptive work-from-home scheme that conned millions of dollars from consumers by falsely telling them they could easily earn thousands of dollars a month by purchasing bogus business coaching services and establishing their own Internet businesses. According to the FTC, consumers who bought into the scheme lost thousands - sometimes tens of thousands - of dollars each, most of it through racking up huge credit card charges at the defendants� urging.
The defendants: Essent Media, LLC, Net Training, LLC, YES International, Coaching Department, and Apply Knowledge
The U.S. District Court for the District of Utah froze the assets of the defendants, who did business under a variety of names, including Essent Media, LLC, Net Training, LLC, YES International, Coaching Department, and Apply Knowledge, and appointed a temporary receiver to take control of the operations, pending the outcome of a preliminary injunction hearing set for March 20, 2014. The FTC seeks to put a permanent stop to the operations and return money to consumers.
�This case halts a massive scam that bilked consumers out of millions for useless work-at-home kits and business coaching services,� said Jessica Rich, Director of the Bureau of Consumer Protection. �The defendants duped consumers into thinking they could earn thousands working from home. Protecting consumers from such pernicious schemes remains a top priority.�
The charges - how the scam worked
According to the FTC�s complaint, the defendants� websites told
- numerous false �rags to riches� stories, using photos - obtained from stock photo agencies - of supposed users of the defendants� services, and
- made false and unsubstantiated claims about how much money consumers could earn.
The defendants� scheme had three
inter-connected phases. In the first phase, the defendants used deceptive
emails and websites to induce consumers to purchase relatively inexpensive
work-at-home kits. They sold these kits, which typically cost from $37 to
$99, with absurd claims such as
If You Can Spare 60 Minutes A Day, We Can Offer You a Certified, Proven And Guaranteed Home Job To Make $379/Day From Home!
But instead of showing consumers how to earn this income, the websites tried to sell them more products or services. In the second phase of their scheme, the defendants promised consumers that they would earn thousands of dollars a month using defendants� coaching program to assist them in establishing their own online businesses. The defendants also encouraged consumers to put the entire cost of the program, generally from $3,000 to $12,000, on their credit card, claiming they would be able to pay it off within a few months. In the third phase of their scheme, the defendants pretended to provide consumers with the promised �coaching� services, while pitching yet additional costly add-on services such as business formation, website design, website development, accounting and tax filing services, and drop-shipping services, none of which proved helpful.
According to the FTC, most people who bought the defendants� services did not get a functional online business, earned little or no money, and ended up heavily in debt.
Exaggerated claims of earnings
The FTC has alleged that the defendants violated the FTC Act by misrepresenting likely earnings and the nature of their services and also violated the FTC�s Telemarketing Sales Rule by misrepresenting material aspects of their investment opportunities.
The defendant's names
The corporate defendants are
- Apply Knowledge LLC, also doing business as
- Apply Knowledge Institute and
- Coaching Department;
- Dahm International LLC;
- Dominion of Virgo Investments Inc.;
- eCommerce Support LLC;
- Essent Media Inc.;
- eVertex Solutions LLC;
- EVI LLC, also d/b/a
- Members Learning Center;
- Nemrow Consulting LLC;
- Novus North LLC, also d/b/a
- Yes International LLC, and
- Your Ecommerce Support International LLC;
- Purple Buffalo LLC, also d/b/a
- Supplier Source LLC;
- 365DailyFit LLC, also d/b/a
- Net Training;
- Vensure International LLC; and
- VI Education LLC.
The individual defendants are
- David Gregory Bevan,
- Jessica Bjarnson,
- Phillip Edward Gannuscia,
- Chad Huntsman,
- Scott Nemrow,
- Jeffrey Nicol,
- Thomas J. Riskas III,
- Babata Sonnenberg, and
- Ken Sonnenberg.
The Commission vote authorizing the staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the District of Utah. On February 11, 2014, the court issued the temporary restraining order against the defendants.
Resources and Related Scams
The Federal Trade Commission works for consumers 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, visit the FTC�s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC�s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.
And please let us know about any suspicious calls or emails you receive. We look for patterns so that we can alert the authorities and victims to new scams, before it is too late!
- For a comprehensive list of national and international agencies to report scams, see this page.