Out-Law / Your Daily Need-To-Know

FTC charges companies for pyramid selling fraud

19 Jun 2001, 12:00 am

The US Federal Trade Commission (FTC) has charged four companies with using the internet to defraud consumers out of around $175 million in an illegal pyramid selling scheme. The companies promoted a work at home business. It charged consumers $125 for an on-line educational package and the opportunity to profit by re-selling the package to other consumers.

The FTC alleges that since late 1998, the four companies violated federal laws by operating the pyramid scheme. They allegedly made false statements about the potential for consumers to make vast sums of money from the scheme and failed to mention that investors in such schemes lose money.

The companies named in the FTC lawsuit are SkyBiz.com and partner companies World Service Corporation, Nanci Corporation International and WorldWide Service Corporation. The FTC asked a district court judge to halt the unlawful operations of SkyBiz.com in May. Its assets have also been frozen, to preserve them for potential consumer redress.

The full hearing will commence on 26th June.