Coastal Publication Biz Op Fraud
Coastal Publications is a Biz Op Fraud according to the state of Washington.
"Coastal Publications is not currently registered with the Washington Securities Division to offer or sell business opportunities in the state of Washington and has not previously been so registered. It is in the public interest that the offer and/or sale of the above-described mail processing opportunity in violation of the Washington Business Opportunity Fraud Act cease.An emergency exists in that further sales of unregistered business opportunities would be hazardous to investors and the public of this state."
Coastal Publications sends out ads like this:
"You will receive immediate payment for ALL the envelopes you receive… And your income is guaranteed to be paid to you, in advance! Your job will be to secure, process and mail envelopes for our company. ... You will also receive full information, with your enrollment of this program on how you will receive a 20% commission for every product sold to every customer that you help us generate from the brochures that you mail! ... This is not an offer of employment, but rather an opportunity to become an Independent Commissioner Mailer for our company. This is not a get rich quick scheme. This is a proven method for making money while providing a service to a company that needs you to mail their brochures. To get you started immediately, we must require a one-time enrollment fee of only $45.00"
Coastal was sanctioned in 2001 by the State of Washington and now appears to be operating out of Florida. Although a search of the State of Florida's Sunbiz Corporate Search doesn't show "Coastal Publications" in their database, my guess is that someone in Florida is just using an old mailing list with Coastal Publications script.
Here is the mathematics of the scam. We have to calculate the: costs of the promotional flyer through the mail, the click through rate, and the value of the expected $45.00 success or conversion fee.
Unless the list that the scammer was using is excellent, the normal conversion rate with coupons and the like is around 2%. So a 100 mailings, even at the first class rate, will cost $50.00 and likely produce $90.00 in return. Not bad, but you can see that if the conversion rate drops, the scammer will have to turn to direct mail, 3rd or 4th class. But again, if the conversion rate is off by a factor of 10, dropping down to the bulk rate still makes sense.
The Washington State Business Opportunity Law is:
(1) "Business opportunity" means the sale or lease of any product, equipment, supply, or service which is sold or leased to enable the purchaser to start a business; and(a) The seller represents that the seller will provide locations or assist the purchaser in finding locations, on premises neither owned nor leased by the purchaser or seller, for the use or operation of vending machines, display racks, cases, or similar devices or coin-operated amusement machines or similar devices; or
(b) The seller represents that the seller will purchase any product made, produced, fabricated, assembled, modified, grown, or bred by the purchaser using, in whole or part, any product, equipment, supply, or service sold or leased to the purchaser by the seller or
(c) The seller guarantees that the purchaser will earn an income greater than or equal to the price paid for the business opportunity; or
(d) The seller represents that if the purchaser pays a fee exceeding three hundred dollars directly or indirectly for the purpose of the seller providing a sales or marketing program, the seller will provide such a program which will enable the purchaser to derive income from the business opportunity which exceeds the price paid for the business opportunity.
The action against Coastal proceeded under 1(b). It is interesting to see how wide the Washington State definition is as compared to either the FTC Rule or the Ontario Franchise Disclosure Act, which has a section dealing with Biz Ops.
Comments
I've heard that they are based out of Jersey City, New Jersey.
Posted by: Samantha | April 11, 2008 3:37 PM