Fraudulent Display Rack and Vending Machine Scam Opportunities
Fraudulent promoters across the country are offering entrepreneurs like you the chance to make $100,000 or more a year selling licensed products from well-known companies.
A business opportunity may involve food vending machines, fax machines, amusement games, or racks with items for sale such as small toys, greeting cards, or cosmetics. They suggest that the machines or racks may be placed in malls, airport terminals, bowling alleys, or other public facilities.
Typically, your responsibilities involve cleaning and restocking the machines or racks, making sure they're in good repair, and collecting vast sums of money from the machines. You are supposed to earn a portion of the proceeds from the multitudes of product or service sales.
After investing thousands of dollars in vending machines, display racks, and products for resale, some investors discover that the promoters do not deliver the equipment they promised, refuse to honor requests for promised refunds, will not hire a repair service to fix broken machines or are not willing to replace damaged racks. In these instances, you either pay for repairs or have to buy new racks with your own money.
People who invest in business opportunities like these rarely make the big money they're promised. Promoters often supply undesirable, overpriced or outdated products along with unprofitable locations. In fact, would-be business owners generally lose their entire investment.
A Picture Not Worth Any Words
KODAK PRODUCTS, $45K P/T - $150K F/T, NO SELLING REQUIRED
Own and operate KODAK product PROFIT CENTERS
Minimum investment $14,500, 1-800-520-0651
When you respond to the advertisement, your name and telephone number are taken by an operator and the call is then returned by a sales rep who explains that the business opportunity being sold is vending machines that distribute disposable cameras and other film products.
They state that the initial minimum investment is $14,500 for which you receive three camera vending machines and the assistance of a professional location service. The investment price does not include the cost of any inventory. You are told that the camera machines return a "very high profit," and that you can make $5 to $8 per item sold, with $6 being the average profit per item sold.
"While some of our machines are selling fifteen to twenty items per day, you should not think that big. Mind you, the lowest known average sales level is five to seven items per day. With an average of four or five sales per day you will generate a net profit of $8,000 to $10,000 per year per machine, and that's not working full-time."
They stress the importance of their use of Kodak products to ensure the success of the business opportunity. Promotional materials contain a number of color pages that prominently display the name, address, and logo of the Eastman Kodak Company. They note that the camera vending machine concept is the result of a "partnership" between them and Kodak; that Kodak itself has purchased fifty of the machines; and that the sales figures they say are typical were verified by a survey of camera vending machines conducted by Kodak.
They also say the vending machines are easy to place; that there are many good locations for them, such as hotels, hospital maternity wards, college dorms, and amusement parks; and that they will arrange for the machines to be placed by a professional locator to ensure that your investment will be successful.
The profit analysis projections show that three camera sales per vending machine per day will return an annual "profit" of $21,130 while four camera sales will return a profit of $28,173. The sales of just three film sales per day are to return an annual profit of $11,457.
They provide you with the names and telephone numbers of "references" who have purchased machines and are familiar with the business. When you call them they indicate that they own camera vending machines and that theirs have been profitable and provide a good financial return.
Later you find out that the camera vending machines do not provide the revenue or profit levels as promised, that Eastman Kodak conducted no such survey, and that it was actually company employees acting as phony references that gave you the reassurance to invest. As well, the Eastman Kodak Company is not affiliated in any way with this "opportunity" other than as a supplier of products.
More Than Four Ways To Lose
***** Business Opportunity *****
Service a company-established vending
machine/display rack route. Part-time.
No experience required. No selling.
Earn $5,000+ per month.
One company offers a vending machine distributorship that requires only a few hours of work per week with supposed net earnings of approximately $40,000 per year.
Absolutely nothing down. Net $40K/yr. Work 6-8hrs/wk. HERSHEY display distributorship. 1-800-287-5748, 24 hrs
When you respond to the ads, they explain that their "4 in 1" package gives you four different ways to make money. You can make money through the vending machines, which would vend York Peppermint Patties, and through commissions earned via the dissemination of three "Take-One" forms displayed in "promotional boxes" attached to, or located on top of, the vending machines.
These are a) applications for a Visa card or MasterCard; b) applications for Hotel Express, a discount travel club; and c) Ballot Box entry forms, where people would enter to win a free car, trip, or money.
The prices for their packages of 22 to 61 machines range from $6,800 to $14,999. From these, they say you can make income or profits ranging from $51,900 to $145,668 per year. For reassurance they have you call the "National Bureau of Better Business" which provides you with a glowing "independent" report of the company. They will also provide, for a fee, a locator company which has already secured lucrative locations for your vending machines. These "hot spots" will earn you money even faster.
After buying the business opportunity venture, you learn from the locators that they had never secured any locations for your vending machines and that your earnings will not come close to reaching the promised income or profits.
The National Bureau of Better Business, which purported to be an independent agency turns out to be operating in collaboration with the promoters. The NBBB is actually an "institutional singer" —a sham organization that endorses business opportunity schemes for a fee.
They Actually Meant Stalking
One venture consists of "talking" vending machines and prepaid telephone cards. The vending machines are designed to be placed in retail locations, such as convenience stores, truck stops, discount stores, restaurants and other places where the public may purchase the prepaid phone cards.
They advertise via national radio ads and give you a toll-free number to call. Through these ads, subsequent phone conversations, and literature, they tell you about the earnings potential and the number of purchasers allowed in a particular geographic area.
They offer to provide a help locating and securing sites for your machines along with significant assistance in your method of operation. They require that you pay $4,990 for a vending machine business venture.
In truth, you cannot reasonably expect to achieve a specific level of earnings or sales to generate the $600 to $700 or more per week per machine as promised or even sufficient profit within one year to equal the amount paid for the machines.
You do not get an exclusive territory and the "limited number" of other purchasers is limited only by how many people they can sell the venture to. They do not help locate your machines in desirable, high traffic locations in your area.
One group promotes "profitable" automobile engine lubricant product distributorships. They place newspaper ads informing you that you can earn from $4,000 to $10,000 a month. The distributorships offered for sale range in price from $13,000 to $28,000 and consist of display racks and automotive lubricants and additives to be placed in retail stores and other commercial outlets for consignment sale.
After you contact them and arrange a face-to-face meeting, they convince you to purchase their distributorships with suggestions that you will have a potential annual income range of $12,000 to $356,000, depending upon the number of locations and the number of sales per location.
They say that they will provide marketing assistance consisting of point-of-sale video and audio tapes and a national advertising campaign. They assure that you will have an exclusive sales territory and that a site locator will help find profitable sites for your machines.
They also say that you can reasonably expect to achieve a specific level of earnings, such as sales of three to six products per day per location or earnings of $35,000-$100,000 per year. They provide you with references of "actual purchasers" who, in turn, give glowing reports.
You send off your money and later find that the locating companies that they provided were not successful in placing your display racks in profitable locations and they themselves did not provide significant advertising assistance.
You quickly learn as well that they sold more than one distributorship within your geographic area during the period in which they said they would limit sales. The "successful distributors" were "singers" or phony references who lied about their purported success for a fee.
It Turns Pink Elephants Back To Grey
The Alcohol Neutralizer business opportunity involves an herbal capsule that the promoters say will rapidly lower the amount of alcohol in the blood of people who have been drinking and reduce or minimize inebriation. They encourage you to target consumers who fear being arrested for drunk driving.
They advertise the Alcohol Neutralizer on television and at trade shows around the country. They also distribute a business opportunity brochure, in which they claim that the Neutralizer's ingredients have been approved or are generally recognized as safe by the U.S. Food and Drug Administration ("FDA"), and that an independent medical study conducted by researchers at Harvard Medical School found that a Neutralizer ingredient guards against the toxic side effects of alcohol consumption and will rapidly lower one's blood alcohol level.
They also include a potential profit projection in their brochure, which shows potential earnings up to $810,000. When you call they repeat the medical and FDA claims made in the brochure and encourage you to call the business references listed in the brochure, which does not happen to include the names of existing franchisees.
They mail you additional information, including a basic disclosure document and samples of the product, and encourage you to try the Alcohol Neutralizer. They tell you that the basic franchise package requires a minimum purchase of five vending machines for $4,475.
In truth, the FDA has neither approved nor listed the Alcohol Neutralizer and the Harvard Medical School study did not show that any ingredient or combination of ingredients in the Alcohol Neutralizer guards against the toxic side effects of alcohol consumption or that it will rapidly lower the amount of alcohol in a person's blood.
Greeting Card Business Opportunity Scams
Don't miss this chance to get in on a "highly profitable $8 billion industry," says the friendly sales rep from the greeting-card company based in south Florida. The job requires only about eight hours a week of easy labor restocking "top selling" musical cards in display racks that the company will provide, says the sales rep, Ted, who doesn't give his last name.
"It's not inconceivable, with 10 locations, to make between $25,000 and $27,000 profit," he says into the phone. In fact, the company will even "guarantee the locations" of the racks, including in high-traffic establishments like supermarkets, drugstores, airports, hotels, and florist shops, he promises.
And all it will cost is $11,850 to get started.
"I know that's a chunk of change," Ted says, slipping into to a sincere voice. "I don't want to beat around the bush," he continues. "But after six months of selling, you'll get your investment back. After a few months, you'll double the size of your route, and see clear profits."
Fat chance, says one law-enforcement official who specializes in fraudulent home-business propositions.
Unfortunately, hundreds of thousands of consumers lose millions of dollars every year in just such greeting-card schemes, says Jody Collins, Florida's senior assistant attorney general.
"They are the one type of case that people invest a lot of money in, because they think they are really going to earn money," Ms. Collins says of the phony promotions, part of a larger phenomenon known as "business opportunity" scams. "For a lot of people, they empty out 401(k)s, or take a loan from the bank, or a second mortgage." But once the check clears, the problems begin.
Ms. Collins recalls one greeting-card case she prosecuted last year. "Either they didn't get their cards at all, or they would get the wrong cards," she says. Other times, the musical cards simply didn't work, or would arrive 11 months out of season – like a shipment of Christmas cards in January.
Then there are those promised locations. Scam artists often tell consumers they will guarantee rack placements in well-known drugstore chains. But after consumers receive the cards and racks, "they get turned over to separate locating companies who tell them 'we can't put you in those stores,' " Collins explains. Instead, the racks end up in "little mom-and-pop stores down the street, or some auto-repair shop, where there is hardly any foot traffic."
They also should set up a personal visit with executives at company headquarters, and with any reference who claims to have had success selling the cards.
Location, Location, Desperation
From: [email protected]
Subject: Disabled Veteran Needs Your Help
Date: 19 Oct 2001
In late August, 2000 I contracted with and paid $750 to a California locator company (Pacific Marketing Solutions) to find locations for 25 coin shooter vending game machines. ( Though not his equipment supplier, who appears to have disappeared, visit coin-shooter.com/coin_shooters.htm to see what these machines look like and how they are promoted.)
I used this company because it was mentioned in the "start up" literature received from the coin shooter company (Tabletop). The owner assured me that he could have my machines in locations by the first week of September.
As soon as he got my money he began putting me off, rescheduling me, lying to me, even threatening me. This went on through September and October then, finally, in late November he got me a single location.
It was a poor location, and when I objected to putting all the machines in one location he called me stupid and told me it was all based on seating capacity. It wasn't until I was installing the machines that I discovered the location would only accommodate 17 of them.
I tried to contact Stephen Mazziotta to get him to honor his guarantee to find all 25 locations, but he wouldn't return my calls.
Then, just a few weeks later, the owner of the location had me remove the machines because they were bringing in less than twenty cents per day, per machine. Once again I again tried to contact the location provider but, as before, he wouldn't return my calls.
I've learned since then that his companies have several complaints on file with the Better Business Bureau in Los Angeles for this same thing. In fact he is threatening me with legal action for the complaint that I wrote to the BBB.
International Location Consultants and Location Concepts
22521 Avenida Empresa #113,
Rancho Santa Margarita, Ca. 92688/ 22431
Antonio Parkway #160,
Rancho Santa Margarita, Ca. 92688-3900 800-845-1232
24681 La Plaza Suite 230, Dana Point, Ca. 92629 800-590-1330
Both my wife and I are disabled. She has a terminal illness, is wheelchair bound, and requires pretty constant attention. I use a wheelchair frequently myself. Our only source of income is disability, and we had hoped the coin shooters would supplement that and allow us to live a more dignified lifestyle.
At the suggestion of the coin shooter company, we used our vehicle as collateral to borrow money to buy the machines. Then we scraped, saved and did without things to get enough money to hire a locator company.
Due to his poor performance, the machines have spent most of the past year in our garage while we continue to scrape by, even doing without prescription medications just to pay the outstanding loan.
The added stresses from all of this have caused my wife to suffer strokes, making her condition much worse and hastening her demise.
The locator knows we can't afford to bring legal action against him, and short of that I don't know if anything can be done to have him correct this situation.
I sent this letter out to over 500 vending companies, enforcement & government agencies, and consumer groups. The response is pretty good, but I need to know how to collate the information I'm getting and who to present it to.
How would I go about getting the attention of enough legislators to get laws enacted (or enforced) to help prevent things like what happened to me.
What an absolute fool I was! I just reviewed your site and my heart was broken afresh.
Back in July 2001, a vending machine company sent me flyers in the mail about the wonderful vending machine business and invited me to attend their business opportunity seminar.
At that time, I was in a desperate situation: not happy at all at my job; earning very little money with huge bills upon me, along with the many other pressures of life. And so, I made a desperate choice and fell for their sweet smooth-talk, and bought eight of their vending machines, all purchased on three credit cards which now total over $38,000.
I quit my job, with high hopes and dreams looming before me, and started to devote ALL OF MY TIME AND ENERGY to my new vending machine route. And now after seven months, six machines are on location grossing a total of maybe $250-300 a week ($130-150 net) and the other two machines are still in my garage collecting dust.
I have a wife and three kids, and take care of my sick, dying mother, who also lives with us. How in the world I am still surviving today, I guess is a miracle of God. My wife is substitute teacher and brings home between $500-700 a month extra. My mom's social security check helps out but after all is said and done, I fall far, far short of what is needed to live and survive each and every month.
It will literally take me the rest of my life just to pay off my credit cards for these vending machines. I would need to buy about 30 more of their machines, just so I could survive. But, then again, what good would that do. They will just be in my garage collecting dust also. NOBODY WANTS THEM!
I fell for their lies, and the lies of their stooges I had called, that each machine would gross between $110-150 per week; that getting customers would be so quick and easy; the lies of their video tapes I had to watch of their "distributors" carrying huge "money bags" to the bank every week. I could go on and on but am too depressed.
SENTINEL DIVERSIFIED INVESTMENTS INC.
820 S. MONACO PKWY DENVER COLORADO.
advertised that you can buy vending machine that sell the small lifesavers, and they will locate the machines for you and supply you with the life savers for a fee. For all this you pay $4000.00 dollars though they also advertise other types of vending machines.
They sent the machines without locations or lifesavers. When you protest that you don't want the machines without locations, they assure you that you will get a complete refund.
Ha Ha, big laugh. They vanish, the phone number is disconnected and you are left holding the bag
W. Fowler 10/05/02.
Boca firm accused in vending machine scam
By Jeff Ostrowski, Palm Beach Post Staff Writer
BOCA RATON -- 02/14/04- Tracey Broome thought she'd found a solid investment when she paid $3,000 apiece for vending machines she expected to generate hundreds of dollars a week in sales.
Instead, Broome has a garage full of broken-down snack machines at her home in Rock Hill, S.C. And in a lawsuit filed Thursday in Palm Beach County Circuit Court, Broome claims King Group International of Boca Raton scammed her and her father of $75,875.
That's how much Broome and her father, James Yeager, paid King Group last month for 25 vending machines and the right to place them at high-traffic areas in Charlotte, N.C., including Charlotte/Douglas International Airport and Lowe's Motor Speedway.
Broome isn't the only investor to accuse King Group of shady dealings. Since November, the Better Business Bureau of Southeast Florida has received eight complaints about King Group from people throughout the country, and the Boca Raton Police Department has opened an investigation of the firm.
King Group's office on Park of Commerce Drive is empty. Its state incorporation records list John Thomas as its president. A reporter's calls to the company Friday were not returned.
Broome and Yeager learned of King Group last month when it placed an advertisement in The Charlotte Observer about the vending machines. Broome checked out the company by contacting the Federal Trade Commission and state attorneys general in Florida, South Carolina and North Carolina. Finding no complaints against King Group, and hearing a persuasive sales pitch from the company, Broome decided the snack machines were a legitimate investment.
King Group promised to deliver the shiny new machines to her home, then send out its "location team" to help her install them. But the snack machines arrived in poor repair, and the location team never showed up, she said.
"The machines are a piece of crap," Broome said Friday. "They have bill changers that don't work. Parts are missing."
Broome's attorney, Joel Kenwood of Boca Raton, said he hopes to recover at least $26,000 of Broome's investment. That amount was set aside by the King Group for her in an account at Wachovia Bank; the bank has frozen the account, Kenwood said.
As it turns out, vending machine investments are plagued by consumer complaints, according to the Florida Department of Agriculture and Consumer Services. Consumer protection agencies frequently receive gripes about machines that are overpriced and broken, that are placed in poor locations and that generate less revenue than promised.
Broome says her father, who retired after a 38-year career as an engineer, took out a mortgage to pay for his $45,000 share of their investment. Broome and her husband dipped into their children's college savings for the other $30,000.
"I feel like such a fool," Broome said, "and I promise I'm an educated person."
Do you have any information on a company called A.W. International 1424 W Price Rd #148, Brownsville Texas 78520, phone number 888-747-7922 and 956-341-1113.
They sell Plinko machines that can be played like the plinko game on the Price is Right. If the chip falls into the right spot the person wins a prize, usually a product of the store that the machine is located in.
I am interested in doing business with them but I want to check them out.
Patrick O'Neill 09/22/02
Trade Commission and State of Maryland v. Accent Marketing,
Inc., et al.
The Federal Trade Commission announced the settlement of a case charging that the defendants deceptively sold bulk-candy vending machine business opportunities and a business opportunity involving a coin-operated game. Among other things, the settlement bans the defendants from advertising, promoting, or selling any business ventures, and prohibits them from owning or working for any entity that engages in those activities. The case was filed by the Federal Trade Commission and the State of Maryland as part of "Project Busted Opportunity."
Trade Commission v. Greeting Cards of America, Inc., et al.
The Federal Trade Commission announced the filing of a complaint against these defendants, charging them with using deceptive tactics in selling their greeting card business opportunity. According to the complaint, the defendants marketed and sold a greeting card business opportunity that defrauded consumers out of almost $3 million. The complaint seeks to bar further misrepresentations and to obtain consumer redress.
States of America (for the Federal Trade Commission) v. Turnkey
The Federal Trade Commission authorized the Department of Justice to file an amended complaint in this action. The case was initially filed as part of "Busted Opportunity."
States of America (for the Federal Trade Commission) v. Univend,
LLC, et al.
The Federal Trade Commission announced a settlement in this matter. The initial complaint alleged that the defendants violated the Commission's Franchise Rule while selling vending machine business opportunities. The settlement: requires the defendants to pay an $11,000 civil penalty; prohibits them from making false and misleading representations in connection with the sale of business opportunities; prohibits them from providing prospective business opportunity purchasers with the names of references other than those that the FTC's Franchise Rule requires; and requires compliance with the Franchise Rule.
Trade Commission v. Universal Greeting Card Corp., et al.
The Federal Trade Commission announced settlements in this matter. The defendants have agreed to settle charges that they made false earnings claims, used shills, and made other misleading representations to sell greeting card business ventures. The settlements permanently ban the defendants from participating in the sale of any business venture and require them to give up their ill-gotten gains. This case was originally filed as part of "Project Busted Opportunity."
Look Before You Leap
Before you invest in a vending business operation you may want to acquire some information from this company which has a price catalogue of vending machines, a book on the industry and various instructional packages. This is a vending company as well, but at least they seek to inform you properly before you enter this industry with visions of sugar plums clouding your wisdom.
|THE HANNA GROUP
Lenexa, Kansas 66285-4304