FTC Takes Action Against Work-at-Home Scams

July 10, 2009 — -- The Federal Trade Commission is taking action against an alleged bogus online work-at-home offer called ProcessFromHome, which was profiled by "20/20" this past March.

On July 1, 2009, the FTC filed a complaint in the U.S. District Court for the Central District of California Southern Division, citing that "the defendants misrepresented that consumers would be hired as rebate processors, made false earnings claims, and misrepresented the refund ("Make Money Or It's Free") guarantee," according to the FTC complaint.

Janice L. Charter, an attorney with the FTC who worked on the case, tipped her hat to the broadcast, saying, "'20/20's' insights were valuable to us as we pursued our investigation."

ABC News tracked down Michael Allen Brooks, the owner of ProcessFromHome, outside his Newport Beach, Calif., apartment complex. Brooks denied any wrongdoing and blamed copycat Web sites for the flood of complaints.

In fact, Brooks also denied ownership of the operation. It was only during a follow-up phone conversation that he conceded ownership.

A California judge will have the final word. The FTC is asking for preliminary and permanent injunction, and for an order to freeze Brooks' assets.

As "20/20" previously reported, con artists were posting bogus work-at-home job leads at an unprecedented rate.

"Currently there's a 54-to-1 scam ratio among work-at-home job leads on the Internet," said Staffcentrix co-founder, Christine Durst, who screens up to 5,000 online job offers every week and rates them on her Web site. "That means that for every 55 [work-at-home] job leads that you find on the Internet, 54 of them are going to be outright scams or downright suspicious."

Click here to read the original "20/20" story on work-at-home scams.

Click here to watch the original "20/20" report on work-at-home scams.

Nearly 2.5 million Americans get sucked into work-at-home scams every year, an industry that takes in $400 billion annually, according to a report by the Federal Trade Commission. In the past, scammers tended to advertise their programs with letters, classified ads and signs wrapped around telephone poles. Today, the Internet has become the standard means to reach victims because it's cheap and reaches an international audience.

Avoiding Work-at-Home Scams

Consumers need to be incredibly careful when researching mystery shopping sites and offers, says Durst. Her Web site lists companies that have been vetted, and she also advises people to "look for companies that are members of the mystery shopping association."

Experts also advise anyone looking at a work-at-home offer to search for contact information for the company, and refuse to sign up for anything without it. It's important in case you need a refund down the road or have questions. In reporting this story, ABC News ultimately enlisted a private investigator -- Benn & Associates, a subsidiary of Iversen & Biondo -- to help us locate some of the owners.

There are, of course, legitimate work-at-home jobs, but no one should expect to make more than you would at a brick and mortar job. And if an offer seems too good to be true, it probably is.

Tips to avoid becoming a victim of work-at-home scams:

There are machines that stuff envelopes. Avoid all envelope-stuffing offers.

You shouldn't have to pay to work. Avoid offers that charge a fee up front.

Avoid jobs that boast high wages and require no experience.

Always consult the Better Business Bureau if you have any questions or concerns.

Resources:

To file a formal complaint about a business, visit the Better Business Bureau or the Federal Trade Commission Web sites.

The consumer Web site ivetriedthat.com provides critiques of various work-at-home opportunities and a public forum for information exchange.

National White Collar Crime Center: A national support network for state and local law enforcement agencies involved in the prevention, investigation and prosecution of financial and Internet-based crime.

Ratracerebellion.com: Christine Durbst's Web site, where she screens and rates up to 5,000 online job offers every week.