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FTC Names Its Dirty Dozen:
12 Scams Most Likely to Arrive Via Bulk Email
FTC Consumer Alert, July 1998
Email boxes are filling up with more offers
for business opportunities than any other kind of unsolicited commercial
email. That's a problem, according to the Federal Trade Commission, because
many of these offers are scams.
In response to requests from consumers,
the FTC asked email users to forward their unsolicited commercial email
to the agency for an inside look at the bulk email business. FTC staff found
that more often than not, bulk email offers appeared to be fraudulent, and
if pursued, could have ripped-off unsuspecting consumers to the tune of
billions of dollars.
The FTC has identified the 12 scams that
are most likely to arrive in consumers' email boxes. The "dirty dozen"
1. Business opportunities
These business opportunities make it sound
easy to start a business that will bring lots of income without much work
or cash outlay. The solicitations trumpet unbelievable earnings claims of
$140 a day, $1,000 a day, or more, and claim that the business doesn't involve
selling, meetings, or personal contact with others, or that someone else
will do all the work. Many business opportunity solicitations claim to offer
a way to make money in an Internet-related business. Short on details but
long on promises, these messages usually offer a telephone number to call
for more information. In many cases, you'll be told to leave your name and
telephone number so that a salesperson can call you back with the sales
The scam: Many of these are illegal pyramid
schemes masquerading as legitimate opportunities to earn money.
2. Bulk email
Bulk email solicitations offer to sell you
lists of email addresses, by the millions, to which you can send your own
bulk solicitations. Some offer software that automates the sending of email
messages to thousands or millions of recipients. Others offer the service
of sending bulk email solicitations on your behalf. Some of these offers
say, or imply, that you can make a lot of money using this marketing method.
The problem: Sending bulk email violates
the terms of service of most Internet service providers. If you use one
of the automated email programs, your ISP may shut you down. In addition,
inserting a false return address into your solicitations, as some of the
automated programs allow you to do, may land you in legal hot water with
the owner of the address's domain name. Several states have laws regulating
the sending of unsolicited commercial email, which you may unwittingly violate
by sending bulk email. Few legitimate businesses, if any, engage in bulk
email marketing for fear of offending potential customers.
3. Chain letters
You're asked to send a small amount of money
($5 to $20) to each of four or five names on a list, replace one of the
names on the list with your own, and then forward the revised message via
bulk email. The letter may claim that the scheme is legal, that it's been
reviewed or approved by the government; or it may refer to sections of U.S.
law that legitimize the scheme. Don't believe it.
The scam: Chain letters-traditional or high-tech-are
almost always illegal, and nearly all of the people who participate in them
lose their money. The fact that a "product" such as a report on
how to make money fast, a mailing list, or a recipe may be changing hands
in the transaction does not change the legality of these schemes.
4. Work-at-home schemes
Envelope-stuffing solicitations promise
steady income for minimal labor-for example, you'll earn $2 each time you
fold a brochure and seal it in an envelope. Craft assembly work schemes
often require an investment of hundreds of dollars in equipment or supplies,
and many hours of your time producing goods for a company that has promised
to buy them.
The scam: You'll pay a small fee to get
started in the envelope-stuffing business. Then, you'll learn that the email
sender never had real employment to offer. Instead, you'll get instructions
on how to send the same envelope-stuffing ad in your own bulk emailings.
If you earn any money, it will be from others who fall for the scheme you're
perpetuating. And after spending the money and putting in the time on the
craft assembly work, you are likely to find promoters who refuse to pay
you, claiming that your work isn't up to their "quality standards."
5. Health and diet scams
Pills that let you lose weight without exercising
or changing your diet, herbal formulas that liquefy your fat cells so that
they are absorbed by your body, and cures for impotence and hair loss are
among the scams flooding email boxes.
The scam: These gimmicks don't work. The
fact is that successful weight loss requires a reduction in calories and
an increase in physical activity. Beware of case histories from "cured"
consumers claiming amazing results; testimonials from "famous"
medical experts you've never heard of; claims that the product is available
from only one source or for a limited time; and ads that use phrases like
"scientific breakthrough," "miraculous cure," "exclusive
product," "secret formula," and "ancient ingredient."
6. Effortless income
The trendiest get-rich-quick schemes offer
unlimited profits exchanging money on world currency markets; newsletters
describing a variety of easy-money opportunities; the perfect sales letter;
and the secret to making $4,000 in one day.
The scam: If these systems worked, wouldn't
everyone be using them? The thought of easy money may be appealing, but
success generally requires hard work.
7. Free goods
Some email messages offer valuable goods-for
example, computers, other electronic items, and long-distance phone cards-for
free. You're asked to pay a fee to join a club, then told that to earn the
offered goods, you have to bring in a certain number of participants. You're
paying for the right to earn income by recruiting other participants, but
your payoff is in goods, not money.
The scam: Most of these messages are covering
up pyramid schemes, operations that inevitably collapse. Almost all of the
payoff goes to the promoters and little or none to consumers who pay to
8. Investment opportunities
Investment schemes promise outrageously
high rates of return with no risk. One version seeks investors to help form
an offshore bank. Others are vague about the nature of the investment, stressing
the rates of return. Many are Ponzi schemes, in which early investors are
paid off with money contributed by later investors. This makes the early
investors believe that the system actually works, and encourages them to
invest even more.
Promoters of fraudulent investments often
operate a particular scam for a short time, quickly spend the money they
take in, then close down before they can be detected. Often, they reopen
under another name, selling another investment scam. In their sales pitch,
they'll say that they have high-level financial connections; that they're
privy to inside information; that they'll guarantee the investment; or that
they'll buy back the investment after a certain time. To close the deal,
they often serve up phony statistics, misrepresent the significance of a
current event, or stress the unique quality of their offering-anything to
deter you from verifying their story.
The scam: Ponzi schemes eventually collapse
because there isn't enough money coming in to continue simulating earnings.
Other schemes are a good investment for the promoters, but no for participants.
9. Cable descrambler kits
For a small sum of money, you can buy a
kit to assemble a cable descrambler that supposedly allows you to receive
cable television transmissions without paying any subscription fee.
The scam: The device that you build probably
won't work. Most of the cable TV systems in the U.S. use technology that
these devices can't crack. What's more, even if it worked, stealing service
from a cable television company is illegal.
10. Guaranteed loans or credit,
on easy terms
Some email messages offer home-equity loans
that don't require equity in your home, as well as solicitations for guaranteed,
unsecured credit cards, regardless of your credit history. Usually, these
are said to be offered by offshore banks. Sometimes they are combined with
pyramid schemes, which offer you an opportunity to make money by attracting
new participants to the scheme.
The scams: The home equity loans turn out
to be useless lists of lenders who will turn you down if you don't meet
their qualifications. The promised credit cards never come through, and
the pyramid money-making schemes always collapse.
11. Credit repair
Credit repair scams offer to erase accurate
negative information from your credit file so you can qualify for a credit
card, auto loan, home mortgage, or a job.
The scam: The scam artists who promote these
services can't deliver. Only time, a deliberate effort, and a personal debt
repayment plan will improve your credit. The companies that advertise credit
repair services appeal to consumers with poor credit histories. Not only
can't they provide you with a clean credit record, but they also may be
encouraging you to violate federal law. If you follow their advice by lying
on a loan or credit application, misrepresenting your Social Security number,
or getting an Employer Identification Number from the Internal Revenue Service
under false pretenses, you will be committing fraud.
12. Vacation prize promotions
Electronic certificates congratulating you
on "winning" a fabulous vacation for a very attractive price are
among the scams arriving in your email. Some say you have been "specially
selected" for this opportunity.
The scam: Most unsolicited commercial email
goes to thousands or millions of recipients at a time. Often, the cruise
ship you're booked on may look more like a tug boat. The hotel accommodations
likely are shabby, and you may be required to pay more for an upgrade. Scheduling
the vacation at the time you want it also may require an additional fee.
|You can file a complaint with the FTC by contacting the Consumer Response
Center by phone: toll-free 1-877-FTC-HELP (382-4357); TDD: 202-326-2502;
by mail: Consumer Response Center, Federal Trade Commission, 600 Pennsylvania
Ave, NW, Washington, DC 20580; or through the Internet, using the online complaint form. Although
the Commission cannot resolve individual problems for consumers, it can
act against a company if it sees a pattern of possible law violations.|
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