FTC cracks down on get-rich-quick scams

updated 5:53 p.m. ET July 1, 2009

WASHINGTON - The economic downturn appears to be bringing out the worst in some people.

The Federal Trade Commission announced a major crackdown Wednesday on scammers trying to take advantage of people worried about the tough economy by promising jobs that don’t exist, get-rich-quick schemes, debt-reduction scams and other phony services.

The biggest case involved a California company called Family Products that marketed alleged get-rich schemes such as “John Beck’s Free & Clear Real Estate System.” The FTC says the company made bogus claims through DVDs, brochures and national infomercials about the ability to raise cash fast.

In all, more than 600,000 people were duped out of about $300 million, said the agency.

The law enforcement sweep — dubbed “Operation Short Change” — was announced jointly with the Justice Department. The operation included 15 cases from the FTC, and dozens of additional cases brought by Justice and at least 13 states.

These scams, said David Vladeck, head of the commission’s consumer protection bureau, “raise people’s hopes and then drive them deeper into a hole.”

Beverly Steward, 46, fell for one of the scams alleged by the FTC. In her case, the single mother of two in Washington said she was bilked by a company — identified as Job Safety USA — that promised people certifications for a cleaning job.

“I wanted a job,” says Steward. “I was desperate.”

She answered a newspaper ad and forked over $89. The certifications never came, she said. Neither did a job.

Steward wasn’t alone. The FTC says more than 4,000 people fell prey to the scam.

Messages were left for Family Products and Job Safety USA, but not immediately returned.

The government is going to court in many of the cases to halt the operations and seek return of victims’ money.

North Carolina Attorney General Roy Cooper said complaints to his office about these kinds of scams are up 27 percent.

“In the down economy,” said Cooper, “the scam artists crawl out from under rocks.”

His number-one rule: never pay money up-front.

“If they want money up-front, then they’re up to no good,” said Cooper.

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