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Southfield, Serving Eastern Michigan & the U.P.
Susan Tompor: Small-business owners duped by offers of bogus service, up-front fees
After a company called the Tax Club agreed to a settlement with the Federal Trade Commission and other regulators, consumers are now set to receive $15.6 million in restitution.
July 09, 2014

The last thing anyone starting a home-based business needs to get caught up in is a money-losing spiral that begins with an infomercial or a telemarketing call.

But some Michigan consumers, along with others nationwide, lost thousands of dollars after they paid for business-related services that basically amounted to nothing. Now consumers are set to receive $15.6 million in restitution after a company called the Tax Club agreed to a settlement with the Federal Trade Commission and other regulators.

It is unknown when consumers would receive the money, as it can take several months. But affected consumers should file a complaint with the FTC if they haven’t already. FTC complaints can be filed atwww.ftccomplaintassistant.gov.

It’s yet another reminder that anyone looking to launch a business, make extra money for retirement or pay off debt should never feel pressure to hand over any money because they receive a tempting pitch by phone, e-mail or regular mail.

The New York-based Tax Club started the hard sell by first buying customer lists of small-business owners from companies that had successfully sold an Internet-based business opportunity to those consumers, according to regulators. Then, the phone calls started and kept coming.

The FTC charged that the Tax Club falsely claimed to be connected to those other companies, which made the pitches sound more legitimate.

“They’ve really got a line,” said William Cleary, 59, who said he ended up handing over $4,785 to the Tax Club initially in May 2010. He lost another $400 after paying monthly fees for several months, too.

The Waterford man complained to the Better Business Bureau Serving Eastern Michigan, saying the Tax Club promised to give him expert advice on buying homes and flipping them for a profit. Cleary said on Thursday that he got caught up in the deal in 2010 when he was searching for ways to make extra money for retirement.

The Tax Club pitched coaching services on how to establish a business, such as an e-commerce business. Telemarketers also promoted “business maximization services” that could involve credit development. Some consumers, who complained at online consumer sites, said they were sold help for setting up websites.

Others said the fees and add-on services kept going higher. One consumer, who posted at an online consumer site, complained of paying more than $40,000 over time. Plus some consumers said they suddenly got hit with fees of $39.95 a month — after paying $9.95 a month for years.

Consumers complained of high-pressure sales tactics, repeat calls and difficulty getting their money back.

If the consumer agreed to buy one business-related service, the regulators said, more calls would be made for more “essential” services, which typically cost several thousand dollars per service.

Many of the services offered were neither essential nor provided as promised, according to the complaint brought by the FTC and the New York and Florida attorneys general. The settlement includes judgments against Tax Club executives, who will be banned from selling business coaching services and work-at-home opportunities, subject to certain exemptions. Regulators noted that former Tax Club executives will be surrendering proceeds from the sale of personal property, as well as money in bank and brokerage accounts.

The Tax Club also does business as Success Merchant Services, Corporate Tax Network and Corporate Credit.

Currently, the defendants are operating as 1800Accountant, but they are bound by the terms of the order and subject to contempt charges if they don’t comply, according to an FTC spokesperson.

As for the Waterford consumer, Cleary said he only lost money on this deal so far.

He figures he lost about $15,000 total on botched real estate dreams — including money spent after seeing a Dean Graziosi infomercial on investing in real estate, the money spent on the Tax Club and another $750 spent in 2013 after a Florida outfit called Scammer Guard offered to help him get back money from the Tax Club.

He said he felt he was scammed again by Scammer Guard, as he’s not seen any money yet. The Better Business Bureau has an alert on Scammer Guard, noting that the Florida attorney general had sued Scammer Guard for falsely advertising scam protection services. The company later had agreed to refund up-front fees paid by dissatisfied consumers, according to information posted at www.bbb.org.

Florida’s attorney general has charged that Scammer Guard is violating the court's consent judgment, and the attorney general has filed a motion to enforce the judgment.

Cleary, who works at the General Motors Orion Assembly plant in Lake Orion, said the Tax Club was to help with filing his taxes, too. But in the end, he said, the firm didn’t send his taxes on time and he was late and charged a fee by the Internal Revenue Service.

As for that real estate side business? Never happened.

“I’ve never even flipped a home or bought one,” Cleary said last week.

“I never made a penny.”