Government Grant Info Scheme Nets Millions for Online Firms

As if the economy isn’t hard enough on job seekers, an Internet enterprise found a way to allegedly rake in millions from them, one charge at a time. According to an FTC complaint*, an Internet operation, I Works, offered consumers bogus “free” or “risk-free,” money-making and government-grant opportunities. Consumers would only have to pay a small shipping and handling fee. But once these firms had their credit card information, they would often find charges of $129.95, and monthly recurring fees of up to $59.95 for other products or services they didn’t order.

Enough consumers disputed the charges with their credit card companies that the firm started getting high “chargeback” rates – a no-no that can result in a merchant losing the ability to collect payment by credit card. So the defendants got creative and set up no fewer than fifty-one shell companies and “clean” versions of their websites – including fake reviews – to perpetuate the fraud.

The FTC has charged the defendants with “violating the FTC Act by misrepresenting that government grants are available for paying personal expenses, that consumers are likely to obtain grants by using the defendants’ program, that users of their money-making products will earn substantial income, and that their offers are free or risk-free.”

This case is another reminder of why it is so important to monitor your credit card statements and dispute suspicious charges immediately. If you follow the rules, you will be protected by the Fair Credit Billing Act. However, it’s important to follow the rules:

• Put your dispute in writing to the address listed on your statement for billing errors and inquiries. It is perfectly fine to call your card company, but if you believe there is an error, put it in writing to protect your rights. You have 60 days from the date of the statement on which the charge appears to file your dispute.
• Pay other charges on the statement, or at least pay your minimum payment. You are allowed to withhold payment for the amount in dispute only.
• Keep a copy of your statement, your dispute, and any correspondence from your issuer for your records.
• If you suspect fraud, file a complaint at FTC.gov. For suspected online fraud, file complaints at IC3.gov. Regulatory agencies don’t resolve individual disputes, but they can step in if they see a pattern of abuse.

And try to check out companies you are not familiar with before you buy something online. It’s not always easy to spot a fraudulent website, but it can be a lot less aggravating than clearing up fraudulent charges.  Read these tips from Identity Theft 911 for avoiding Internet fraud.

*NOTE: The Commission authorizes the filing of a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendants have actually violated the law.