More than 90 work from home companies have been shut down by the FTC for fraudulent practices. Image: Flickr / gpaumier / CC-BY-SA

The Federal Trade Commission and Department of Justice have teamed up to shut down more than 90 companies. These work-at-home companies allegedly defrauded customers out of millions of dollars. Most of these companies also targeted unemployed individuals with their work-at-home promises.

Work-at-home businesses targeted

In a joint action, the Federal Trade Commission and and Department of Justice sent shutdown notices and froze the assets of a variety of work-at-home marketing companies operating in the United States. These shutdowns were a part of Operation Empty Promises, an enforcement effort that has resulted in dozens of criminal counts being filed federally, on the state level and locally. The allegation is that these businesses defrauded customers, promising huge work-at-home profits with very little work for a small investment. The largest businesses shut down include:

• Ivy Capital
• Darling Angel Pin Creations Inc.
• Global U.S. Resources
• U.S. Work Alliance Inc.
• Preferred Platinum Services Network
• Abili-Staff Ltd.
• Entertainment Work Inc.
• La Asociacion Nacional de Trabajo

The cost of business fraud

The individuals targeted by these allegedly fraudulent businesses have lost significant amounts of money. In general, these companies used telemarketers to call unemployed individuals and offer webinars and classes on “how to start your own business.” The price of these webinars varied from $2,000 to $30,000. In several cases, the telemarketers would find out what kind of credit limit the customers had on their cards and then charge close to that amount. When refunds were requested, the companies would not respond, or would offer only a few hundred dollars. Just one of the 90 targeted companies, Ivy Capital, earned an estimated $40 million with this fraud.

Targeting the unemployed

By targeting unemployed individuals, these companies are making a bad situation worse. The unemployment rate is dropping in the United States, but very slowly. Many individuals are taking lower-paying jobs than they previously had, so “real” income is actually dropping, despite the increase in jobs. This essentially jobless recovery is putting further strain on social services facing funding cuts. While legal challenges are shutting these companies down, the likelihood that victims will receive compensation is, unfortunately, low.

Sources

LA Times
PC World

The AstraZeneca Seroquel trouble began with marketing for off label uses. From wikimedia commons.

British pharmaceutical company AstraZeneca has just reached a settlement with the Department of Justice over AstraZeneca Seroquel investigations.  The drug Seroquel, an anti-psychotic medication, has come under fire for being marketed for unapproved purposes.  The drugmaker has agreed to pay the Department of Justice $520 million in restitution.  It will hardly make them think about guaranteed loans to cover for the expense, as the drug itself sold about $4.9 billion worth last year.

AstraZeneca Seroquel marketed for wrong purposes

The qualms over AstraZeneca Seroquel were based on the drug being marketed for purposes other than those it is approved for. The DOJ also alleges there were physician kickbacks of payday cash for prescribing the drug for off-label purposes.  The drug Seroquel is quetiapine, which is used to treat schizophrenia and certain bi-polar disorders.  Physicians may prescribe a medication for an off-label use if they deem it appropriate. However, pharmaceutical drugs aren’t to be marketed for off label uses; the FDA considers that a no-no.

Off label uses of Seroquel

Part of the investigation is into whether AstraZeneca Seroquel was marketed for uses it hasn’t been approved for yet. According to the Wall Street Journal, AstraZeneca marketed the drug for off label uses, such as to treat Alzheimer’s Disease, aggression, post traumatic stress disorder, anxiety and depression.  The Justice Department believes the pharmaceutical giant also gave kickbacks to physicians to prescribe it for those purposes.  AstraZeneca set aside $520 million in October for the purposes of a settlement, but it denies the allegations.

Lawsuits pending

There are lawsuits pending against AstraZeneca concerning side effects of off label use of Seroquel.  Seroquel isn’t the first drug to be used off label; every drug has an alternate use, so the use of medication for off label purposes is actually somewhat widespread. For instance, aspirin works as a blood thinner and typically is used as a pain reliever, but it also is used for treating heart disease.  Many physicians prescribe medications for off label uses, and their use is perfectly fine. That said, the idea that physicians would prescribe medication not intended for a particular use for money when a better alternative is available is particularly troubling.

So what’s the impact?

Because the company put the money aside for an AstraZeneca Seroquel settlement months ago, probably not much will come of it.  The company will be complying with federal instructions and will disclose any payments to physicians.