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Federal Trade Commission targets scammers taking advantage of economy

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 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 the Justice Department and at least 13 states.

Florida's actions included a settlement with MagicJack, a company that marketed a "free" 30-day trial for its long-distance phone equipment, but actually charged and debited consumers during the trial.

Other settlements with debt relief organizations were also part of Florida's sweep, including Financial Freedom Resources, a Clearwater company that telemarketed alleged debt reduction services, and Family Credit Counseling Corp. of Fort Lauderdale, which allegedly misappropriated debt management funds.

The biggest case nationally involves 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.

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," Steward says. "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.

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

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

His No. 1 rule: never pay money up front.

"If they want money up front, then they're up to no good," said Cooper.

Times staff writer Ivan Penn contributed to this report, which includes information from the Associated Press. Ivan Penn can be reached at ipenn@sptimes.com or (727) 892-2332.

Federal Trade Commission targets scammers taking advantage of economy 07/01/09 [Last modified: Wednesday, July 1, 2009 9:28pm]
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