March 9, 2001
A federal district court has ordered a temporary halt to a California-based telemarketing scheme that purportedly sold work-at-home medical billing opportunities. Medicor LLC and its manager, Andrew Rubin, promised consumers that they could earn up to $1,500 per week using their home computers to process medical bills for physicians in the consumers' community.
The Federal Trade Commission alleges that the defendants misrepresented their medical billing work-at-home opportunities by touting false earnings claims, misrepresenting the assistance that they would arrange for consumers to get medical billing work and that refunds were readily available. At the Commission's request, the court froze the defendants' assets, and appointed a temporary receiver pending a hearing on the Commission's motion for a preliminary injunction.
The FTC filed its complaint in the U.S. District Court in the Central District of California against Medicor and Rubin as part of "Project Homework" - a law enforcement action targeting work-at-home scams that typically victimize stay-at-home parents, the physically disabled, non-English speakers, and people who cannot secure employment outside the home. Companies that promote these schemes promise consumers that they can reasonably expect to earn substantial income by working from home performing various tasks, such as assembling crafts, stuffing envelopes, or performing medical billing services for physicians.
The defendants promoted and sold medical billing work-at-home opportunities to consumers throughout the United States via newspaper ads and an Internet web site, www.medicorllc.com. According to the FTC, Medicor, based in Van Nuys, California, advertised in the "help wanted" section of various local newspapers touting the high earnings consumers could make using Medicor's medical billing software. A typical ad stated:
"EARN $$$ HELPING DOCTORS process claims from home. $20 - $40/ hour potential. Computer & modem required. We train. (888) 736-9051 Ext. 895."
When consumers responded to the ad, the telemarketers falsely represented that stay-at-home parents or others who wish to work from their homes could make from $20 to $40 per hour processing claims for doctors, or as much as $40,000 per year.
To further induce consumers to purchase Medicor's billing software, the defendants' telemarketers would falsely represent that they would arrange for doctors whose claims the consumers would be processing. In an attempt to convince consumers that Medicor was a legitimate company, the defendants would sometimes refer potential customers to their web site, which offered testimonials from purportedly successful Medicor billers. The defendants charged from $325 to $495 for their business opportunity. When consumers complained that Medicor's business opportunity had been misrepresented, the defendants would often refuse to refund the purchase price. At this point, most consumers were told for the first time that company policy was not to give a refund if the software package was opened.
The FTC complaint alleges that the defendants misrepresented how much consumers who purchased the medical billing opportunity would earn; that they would arrange for consumers to receive medical billing work from physicians; and that consumers would readily obtain refunds upon request. According to the FTC, consumers, in fact, did not earn the promised income, Medicor did not arrange for consumers to receive medical billing services from physicians, and consumers could not readily obtain refunds.
