Surplus Goods Business Opportunity Scam

Image by AlaskanLibrarian via Flickr

From the FTC Press Release on the World Traders Biz Op Scam:, my emphasis in bold.

"Scammers who duped consumers into paying a total of more than $30 million for bogus business opportunities have settled Federal Trade Commission charges that their deceptive claims violated federal law.

The settlements prohibit future violations by the defendants, who promised consumers that they would receive access to overstocked merchandise, expert training in the surplus goods industry, and substantial income.

The FTC sued the defendants in February 2005 as part of "Project Biz Opp Flop," a crackdown on deceptive business opportunity and work-at-home schemes.

The settlements entered last April ban the defendants from the business opportunity and franchise industries and prohibit them from misrepresenting any goods or services.

The settlement orders also bar the defendants from selling or otherwise benefitting from personal information about customers who paid them before the orders were entered.

In addition, the orders impose a $30.7 million judgment, which is suspended based on the defendants' inability to pay.

The full judgment will be imposed if they are found to have misrepresented their financial condition. The settlements also contain standard record-keeping and reporting provisions to allow the FTC to monitor compliance.

The defendants are Sheldon and Judith Takala Fidler and nine companies they controlled: World Traders Association, Inc., United Traders Association, Inc., International Merchandise Group, Inc., Trans-Global Connections, Inc., Musketeer Partners, Inc., Fulfillment Options, Inc., International Associates Worldwide, Inc., Magna Delta, LLC, and Office Options, LLC."

There are two things I want to address, in light of yesterday's discussion about the relevance of the history behind the principals of the Mr. Cigar Franchise.

Biz op scammers are one of the worst recidivist's around - they flee from biz op scam to investment scam and are rarely tracked down.

The internet in principle, and the openess of the US corporate databases, allows us in the principle to follow these bad actors - if only there was a central database that allowed the public to update it.

The FTC could do its part by first listing where these companies were incorporated, and posting the corporatation documents.  It is simply too much to ask that the FTC is going to be engaged in a serious record keeping and be vigilant when the FTC admits that this scam cost the public $30.7 million before the FTC could act to shut it down!

I am not blaming the FTC nor suggesting negligence - it is simply one of the features of having a complaints driven agency that fraud will be allowed, up to a certain point before the complaints meet the FTC criteria for action.

But we can lower the costs of the fraud by giving consumer complaint sites the tools to bring to the attention of the FTC updates on the biz op scammers.  And many times, the actual control person is not prosecuted by the FTC because the corporate officers are simply dummies.

Finally, and again this is not a complaint, but the FTC routinely publishes how much in civil judgments it obtain against biz op criminals.  But, they don't publish with the samer regularity how much they actually collected.  This ratio is very important, it will tell people how much they can recover by reliance on the FTC.  

Finding out that biz op criminals steal about 95 cents on the dollar would deter many people from even considering a biz op.