The Stuff of Schemes Aimed at Work-at-Home Businesses

by Seena Gressin Attorney, Bureau of Consumer Protection, FTC

You’ve heard of the “right stuff” — the mix of bravery and brass that author Tom Wolfe told us powered the nation’s first astronauts to conquer space. Well, here’s the wrong stuff — a work-at-home envelope-stuffing scheme that bilked more than 50,000 people out of over $7 million.

In a case announced today, the FTC charged that convicted felon David Brookman and his companies falsely promised that people could earn $5,000 a week by stuffing envelopes with flyers and mailing them. The FTC says the defendants charged an up-front fee of $99 to $399 for their program, calling it a one-time fee that would bring big paychecks for home-based workers.

What did people really get? According to the FTC, just a few supplies and the bad news they would have to buy more supplies, and pay their own postage and other costs, to try to make money. They also learned they would only be paid for enrolling new recruits in the scheme — not for mailing flyers. As for the handful of people who actually made money? On average they got a total of less than $20.

But Brookman has nerve, alright. In addition to his felony convictions for forgery and theft, he settled a lawsuit in 2013 with the state of New Jersey for operating the same kind of envelope-stuffing scheme. The FTC’s Business Opportunity Rule required Brookman and his companies to tell potential enrollees about the New Jersey lawsuit. The FTC says they didn’t, and that’s one more violation of the law.

Here are a few tips to help you avoid a similar scam:

• Be skeptical of promises from business opportunity sellers that you can make big money working from home, especially when the “opportunity” requires you to pay an up-front fee. Envelope-stuffing schemes are a classic work-at-home scam.

• If the seller doesn’t gives you a one-page document — required by the Business Opportunity Rule — that gives you key information about what the seller is promising, don’t hand over your money.

• Check out the seller’s claims. If you’ve never heard of the seller, enter the company name in a search engine with words like “complaint” or “scam,” and read about other people’s experiences.

To learn more, read our article about Work-at-Home Businesses.