A settlement between Nu-Skin International, Inc. and the office of Pennsylvania Attorney General Mike Fisher has resulted in a welcome contribution to the National Fraud Information Center. Nu-Skin was accused of operating a pyramid scheme to sell energy and technology services such as electricity, cable television, and Internet services through independent distributors. Distributors paid $350 to join the program and were offered financial incentives to recruit new members. The Attorney General alleged that during the recruitment period, Nu-Skin wasn't even able to sell the services that its distributors were to promote. As part of an Assurance of Voluntary Compliance that Nu-Skin entered into with the state on August 3, 1998, the company agreed to donate $1,000 to the NFIC. This is the first time that the NFIC has received a contribution through a case brought by any agency that receives its fraud reporting services. "Our office appreciates the work of the National Fraud Information Center and we are pleased to be able to support it," said Mark S. Stewart, Deputy Attorney General in Pennsylvania.
The NFIC, a toll-free hotline operated by the nonprofit National Consumers League, advises consumers about telemarketing and relays reports of suspected fraud to the appropriate law enforcement agencies. A related program, the Internet Fraud Watch, provides advice and assistance regarding promotions made online or via the Internet. Consumers can reach the programs through (800) 876-7060 or www.fraud.org.
The hotline receives some support from businesses and trade groups that are concerned about telemarketing fraud, but the bulk of its nearly $400,000 operating cost is borne by the National Consumers League and its members. "We help law enforcement agencies make their cases and in some instances even alert them to problems they haven't heard about yet from their constituents," said Susan Grant, Director of the NFIC. "We're really excited to be included in this case and we hope other agencies will think of us when they're negotiating settlements or asking for judgements."
In addition to the contribution to the NFIC, Nu-Skin agreed not to make any representations about resale of electric service until it has contracts in place to provide it. It also offered refunds to Pennsylvania consumers who paid to join the marketing plan and reimbursed the state $34,000 for the costs of investigation.
"Electric deregulation and competition opens a whole new area for fraudulent money- making schemes," noted Ms. Grant. "At the National Fraud Information Center, we have our ears to the ground and can let law enforcement agencies know as soon as we hear about anything that sounds suspicious."
If you are a reporter and have questions, please contact NCL's Public Affairs department.
If you would like to report an incident to the NCL's National Fraud Information Center/Internet Fraud Watch call us at 1-800-876-7060 or use our online forms.
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