7 Businesses To Watch Out For
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Recessions have a way of creating many new business opportunities. But they also have a way of creating opportunists -- businesses that, in an effort to make a quick buck, leave their customers feeling as if they were taken advantage of. Since 1912, the Better Business Bureau has sought to monitor truth in advertising, reward companies with good reputations, mediate disputes between customers and businesses, and expose businesses that don't do a good job of satisfying their customers. So which companies does the consumer-watchdog organization have its eye on these days? The following businesses received an "F" grade from the BBB in late 2008 or early 2009, based on consumer complaints and the companies’ lack of follow-up. The bureau advises consumers to keep on alert when doing business with them.
Desperate times can drive people to desperate measures, which explains why thousands of Americans have paid lots of money to companies who say they can adjust their mortgage payments and save their homes from foreclosure. “People give them money, and nothing happens,” says Gary Almond of the Better Business Bureau of Los Angeles. Almond says they’ve received 74 complaints and more than 11,000 inquiries about the Federal Loan Modification Law Center based in Irvine, California, since last fall. Many complainants told the BBB that they paid thousands of dollars based on convincing sales pitches from company workers who did not follow through on their promise to modify mortgage payments. Bill Anz, managing partner at the Federal Loan Modification Center, attributes the large volume of complaints to the fact that they handle a large volume of modifications and operate in 50 states. “We take the hit because of sheer size,” he says. Anz adds that they won’t engage with a customer who is not qualified for a modification in the first place, and that refunds are issued to unsatisfied customers.
The scarcity of capital available to small-business owners has prompted a proliferation of online companies that promise to help entrepreneurs raise government grant money. Here’s how it works: An entrepreneur receives an unsolicited e-mail that leads him or her to a sophisticated-seeming website that suggests ways to raise thousands of dollars through a federal program. As part of the operation, the business owner is allegedly asked to pay several hundred dollars via wire or money order. Complainants say they never heard back from the fundraising company after the payment went through. Advising businesses to steer clear of such offers, the BBB has blacklisted groups such as CDI Resources. In a press release issued in March, the BBB called the organization a “grant scam,” and warned that similar companies “operate under many different names and phone numbers, take your money, then leave town to start all over again.” Inc. attempted but could not reach CDI Resources by phone, and their website appears to be disabled.
Enticing consumers with poor credit, Baltimore-based BlueHippo advertises computers and electronics that can be purchased through installment financing plans. The company asks consumers to pay one upfront fee, followed by 52 weeks of layaway payments. The product will be shipped within two or three months, the company says. But miss a payment early on, and you might not get your purchase – or a refund, according to customer complaints. Consumers “find themselves strapped for cash and want to stop the charges, but the company makes it very challenging,” says Angie Barnett, president of the Better Business Bureau of Greater Maryland. According to Barnett, many unhappy customers who have not paid in full are still waiting for their computers. More than 3,000 BlueHippo customers have issued complaints with the Greater Maryland BBB, and more than 1,000 reported that they have not heard any response from the company. The company did not respond to phone or e-mail messages from Inc. requesting comment.
Online job searchers should beware of the many complaints about those "work-at-home" or "get rich quick" job programs that target people looking for employment. The latest offer? Rebate processor jobs offered by, among others, the aptly-named website Rebateprocessorjobs.com. The company and its many competitors claim that they offer a work-at-home opportunity processing rebates. For an initial start-up fee (that ranges from $40 to more than $500), companies promise to send the work-from-home aspirant a starter-kit on how to set up a business. Many job-seekers have taken the bait, but were disappointed with what they paid for: instructions on how to buy and sell ads online. “Basically because these companies do provide something in return, they thinly skate by on that practice,” says Gary Almond, of the Better Business Bureau of Los Angeles. For its part, Rebateprocessorjobs.com does post this disclaimer: “The testimonials on this website should in no way be considered typical earnings. You may make more or you may make less. You might not make anything.”
Attaining a "firmer, flatter midsection" may sound appealing, but beware: hundreds of consumers have signed up for a free “risk-free” trial of FX Supplements -- açai berry weight loss pills -- and wound up both fat and unhappy. The offer sounds tempting: consumers are told they only have to cover the cost of shipping and handling. But once the trial period ends, some consumers have reported to the BBB that it is difficult to halt the monthly shipments of product, for which they are billed more than $80 each. According to the bureau and the Rip Off Report, an online consumer forum, some unhappy customers tried reaching the sellers by telephone only to discover the number was out of service or busy. One complainant on Rip Off Report from McCalla, Alabama, alleged that FX Supplements touts “bogus phone numbers and [a] bogus product.” According to the Better Business Bureau, attempts to halt by e-mail the continuous charges were equally fruitless. FX owner Austin Hilton says their unresponsiveness was a result of overwhelming demand. “I had an old phone system that only had 23 landlines,” he says. Hilton says he has hired extra workers to answer the phones to ameliorate the situation.
While it may not be the most high-brow of businesses anyway, Mantra Films -- the company that creates and sells Girls Gone Wild video tapes -- has been accused by scores of customers of fraudulent practices, according to the BBB. Some customers, who said they signed up to buy just one DVD, were billed multiple times thereafter, while other customers reported that unordered DVDs (and bills) landed in their mailboxes. The company settled a $1.1 million Federal Trade Commission complaint for these same issues -- unauthorized shipping and billing charges -- in 2004, but the issue has not died down. “This is a big scam they’ve been pulling for a long time,” says Ed Magedson, founder of Rip-Off Report, the online consumer forum that has logged nearly 400 complaints about the company. Mantra Films did not respond to phone or e-mail inquiries from Inc.
Heightened financial anxiety has prompted the proliferation of companies that claim that they can help consumers reduce the amount of taxes or fines they owe the government. Some of these would-be tax-relief agencies promise to settle tax debts for "pennies on the dollar." Yet, that's a tall (and in many cases, impossible) order to deliver. Companies like Power Tax Relief have been accused by customers of charging hefty fees and then failing to deliver on their promises. In a press release, Paulette Hotton of the Better Business Bureau of Connecticut charged that many of these tax relief companies overstate their capacity to help clients. “Consumers complain that many of these firms exaggerate or misrepresent their ability and expertise in effecting settlements and often promise much more than they can deliver,” she says. Sarkis Manukyan, a Power Tax Relief spokesperson, denies any wrongdoing and thinks that the BBB’s system of collecting complaints is unfair. “They don’t see how many good cases we do. They only see the bad ones,” he says.