US cracks down on firms pushing scams

Chris Dozoryst had just graduated from college, gotten married, and was broke. So the budding viola player decided to look for a day job - perhaps something with the federal government.

While scanning the help-wanted ads, the Wheeling, Ill., man found one from something called US Information Center, which mentioned government jobs and "now hiring" in the same breath. He called USIC, a private company that sold him a book for $59.95 promising to help him pass the civil-service exam.

But the moment he opened it, he felt he'd been had. "The sample tests looked like they were out of elementary school - it wouldn't require any studying to pass them," he recalls.

Mr. Dozoryst's allegations aren't unusual. Over the past two years, 1 million Americans have been scammed out of more than $50 million in cases of "job fraud," the Federal Trade Commission estimates.

And with the economy soft and layoffs rising, the FTC, the nation's fraud cop, is concerned that con artists will take in even more Americans desperate to pay the rent. The most common scams offer the promise of civil-service-protected government jobs or the lure of making substantial money by doing work at home.

Last month, the FTC sought permanent injunctions against nine companies - including USIC, which denies wrongdoing - that it says promised jobs with the federal or state government, including the US Postal Service. The commission's complaints allege that the companies enticed people through classified ads, cold calls on the phone, Internet advertising, and promises of training-school seminars to spend money to obtain jobs that didn't really exist.

"The representations they were making were very misleading," says Elaine Kolish, associate director of the FTC's Division of Enforcement.

For example, FTC investigator Lisa Harris, based in San Francisco, last year phoned an organization called the National Information Center to inquire about post-office jobs. She says she reached a man named "Steve," who asked her if she would be registering with a credit card or personal check.

Ms. Harris then asked, "Your ad says that you are hiring for 2000. Are there, like, a lot of jobs that are available?" Replied Steve, "In all areas." Later, he told her she should register soon "because the positions are filling up rather quickly."

The official hiring process

The reality is that the post office gives hiring exams only every couple of years. In the case of the Oakland, Calif., postal district in the Bay Area, where Steve implied jobs were available, it's been three years since the last test. One is scheduled for the middle of this year. In the Chicago area, where Dozoryst wanted to apply, the next postal exam is not for another two years.

"Those days are gone when you could just walk in and apply for a job with the federal government," says Ms. Kolish. "You never have to pay for information about federal jobs."

The FTC is trying to get redress for consumers. Late last week in Los Angeles, USIC, which also did business as the National Information Center, agreed to a preliminary injunction against practices like those allegedly committed by Steve.

But USIC will ask that the government's lawsuit be dismissed, says J. William Eshelman, in the Washington office of the law firm Feith & Zell, who represents USIC. He denies the company acted in any fraudulent manner. He says it is complying with a 1995 consent decree signed with the post office that details how the company can portray its services. It arose after an earlier probe into the firm's practices.

"When does the government's word mean anything?" asks Mr. Eshelman, who accuses the FTC of using innuendo and selected facts. "We are not avaricious frauds."

At the Better Business Bureau, job fraud is the top inquiry. In 1999, the most recent year with national data on job fraud, the Better Business Bureau received 280,000 inquiries and more than 5,500 complaints. Many of those had to do with "work-at-home" companies, which for a fee offer projects like stuffing envelopes and product assembly.

The Better Business Bureau says the earnings promised by undertaking the projects were practically impossible to make.

According to the bureau, the scope of the phenomenon is underestimated. "This is a bigger problem than anyone realizes," says Ken Hunter, president of the Council of Better Business Bureaus in Arlington, Va.

The bureau launched Operation Job Fraud Task Force late last year in an effort to expose some of the misleading practices, particularly of "work-at-home" companies. "They prey on the idea that people really want something they can do at home," says Katy Conklin of the Chattanooga (Tenn.) Better Business Bureau and task-force chairwoman.

The bureau's task force found that companies mailing out materials for work-at-home schemes include warnings that workers must follow specific standards to get paid.

"The hook is that there is no way you can follow their specifications," says Ms. Conklin.

Access codes and $250

One of the latest scams involves companies selling software to enable at-home workers to process medical bills. Recently, Linda Carmody of the Indianapolis Better Business Bureau received a call from a woman who bought the software for $250. When the buyer attempted to install it, she found she needed an access code. But she could not get through to the company to get the code. She contacted it in writing, asking for a refund. "They wrote back that you have to have the code to get a refund. I could see her spinning around like a roadrunner," says Ms. Carmody.

These schemes have become so popular in the Indianapolis area that Carmody offered her staff $1 for every sign they pulled down. So far, they've collected more than 2,000. "Now we have a mountain of signs," she says, "but I feel for every one we pull down, we may have saved someone some heartache."

(c) Copyright 2001. The Christian Science Monitor