FTC Threatens Net Pyramid Builders With Curse

The Federal Trade Commission (FTC) has unleashed a plague of warnings and federal prosecution upon Internet-based pyramid scheme perpetrators, the federal agency announced today. As part of the anti-online fraud plan the FTC announced in early March, the agency and 26 state law enforcement organizations have either taken, or planned, legal action against more than 600 pyramid scheme operators on the Web. The FTC cited two particular companies - Equinox International Corp., and 2Xtreme - against which the agency took legal action. Equinox also faced prosecution from Hawaii, Maryland, Nevada, North Carolina, Pennsylvania, Tennessee, and Virginia. 2Xtreme, meanwhile, built up 60,000 participants before it was busted. The attorneys general of Arizona, Idaho, Illinois, Kentucky, Nevada, New York, Tennessee, and Virginia have also taken legal action on their own after the FTC's "Surf Day" in March. As part of its statement, the FTC also highlighted its brochure that warns consumers of signs that may constitute a pyramid scheme online. The FTC said that Web surfers should avoid business opportunities that "offer commissions for recruiting additional distributors...(and) ask new distributors to spend money on high-price inventory." It also said that surfers should be "cautious of plans that claim you_ll make money through continued growth of your "downline" recruits, instead of sales," and that "promise enormous earnings or claim to sell miracles." The FTC also said potential participants should look out for "shills" - fake references. The agency said it uses the Surf Days to promote the idea of "educate before you litigate." So far, it has held 15 formal surf days, focusing on ferreting out illegal plots in health care claims, credit repair operations and get-rich-quick schemes.