Anatomy of a Cashier's Cheque Scam and the New FTC Business Opportunity Rule
Recently, the AG for Illinois announced a consumer alert about a cheque cashing scam. I had posted some further information about this consumer alert, but I want to analyze how if at all the new FTC Business Opportunity Rule would have dealt with this case. Let's look at some of the players, innocent players who are necessary to enable this scheme. First, there has to be an ISP or two involved to host the website for the bogus charity. Second, there has to be a bank which will accept the cashier's cheques and clear them before they detect that they are forged. Third, there has to be a second bank which accepts the individual's personal cheque, clears it and sends the funds overseas. Finally, there has to be a respected source of job postings in order for the "donations handler" position to gain credibility. Each one of these institutions plays a role as a gatekeeper, preventing fraud or scams is part of their public and regulatory duty; in some cases, these public duties actually give rise to a duty of care to a particular individual with whom they are transacting.
How does the new FTC Business Opportunity Rule assign public duties to these institutions, which are necessary elements of the fraud? (The institutions are necessary and likely innocent players.)
Technorati Tags: cheque cashing, personal cheque, consumer alert, job postings, gatekeeper, cashier, ftc, clears, bogus, scams, business opportunity, cheques, credibility, analyze, fraud, innocent, charity
Well, it doesn't. No third party gatekeeper liabilities are contemplated by the new FTC Business Opportunity Rule. However, if the disclosure documents were public and had to be registered with the FTC, then individuals at these institutions could easily determine whether they were dealing with an unregistered business opportunity seller and take whatever action that they thought was appropriate.
Technorati Tags: cheque cashing, personal cheque, consumer alert, job postings, gatekeeper, cashier, ftc, clears, bogus, scams, business opportunity, cheques, credibility, analyze, fraud, innocent, charity
