Valley business accused of ripping off customers for thousands of dollars

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by Meredith Yeomans & Carey Pena

azfamily.com

Posted on May 18, 2011 at 6:48 PM

Updated Wednesday, May 18 at 6:48 PM

PHOENIX - “You're going to be compensated no less than $10,000 per month,” a telemarketer said, as Texas resident Gary Cotton listened tentatively on the other end of the line.

That's just part of the 30-minute long pitch he heard that day.

Gary recorded the conversation he had with the sales guy who called his home in January 2011, he said talking him out of $10,000.

“Four to five weeks from the time that we start your program on the 10th of January, again, you should have $50,000 in commissions paid back to you,” the telemarketer promised.

Gary thought he'd be working from home overseeing credit card transactions or helping people repair their credit.

Thomas Carroll from California fell for the scam too.

Carroll said he invested all the money he had believing he'd make thousands more.

“As you can see, I'm a very disabled man,” he said. “I'm quadriplegic with double amputee.”

3 On Your Side has received nearly a dozen similar complaints about a Phoenix-based company called Economic Freedom Corporation.

Kathy Pocock from Georgia told us she invested $22,000 but hasn't received a single check.

Georgia retirees Paul and Annette Hochstetler say EFC, “Made big promises, but delivered nothing” in exchange for their $13,000 investment.

So, what's this business really all about?

That's what 3 On Your Side wanted to know and we went looking for answers.

After reaching out to all of the people listed as owners and managers of the company, we showed up at an unmarked office space in Phoenix.

We're told this is where EFC has set up shop.

Turns out, this is a very tangled web.

“As I was walking out my boss is going, ‘Where are you going where are you going?’ I said these people are being lied to. You know it. I'm done with this,” John Wilson said.

Wilson said he used to work for EFC but claims he walked out because he said would-be investors were being ripped off.

That’s when he called 3 On Your Side.

We wanted to ask the owners of EFC about all of these allegations.

Turns out, the company has packed up and moved to Las Vegas.

When we finally got in touch with the new owners to ask about the money these people say they invested we were told there are no guaranteed results.

In a statement, a company representative writes, in part:

"Our goal is simply to service the existing clients and help train them to make the most of their home based business.  It is unfortunate if clients were sold under the old ownership and didn’t make money because we know several clients that did and do make money.  Unfortunately marketing (advertising) can be hit and miss.  I do know from the clients we have spoken with that they were never given a guarantee and that they had to sign a disclaimer that said just because they were buying advertising for their home business didn’t mean they would necessarily generate income."

The Better Business Bureau has also posted a warning about EFC and its affiliates.

Spokesperson Felicia Thompson writes, “BBB advises using extreme caution and thorough research when considering investing in a business opportunity that requires large upfront fees.”

According to the BBB, "Economic Freedom Corporation offers consumers a business opportunity selling products and services via a website. Complaints allege EFC asks consumers for upfront fees, usually $495 for a merchant license.  Some consumers allege the $495 fee is for developing a website to sell merchant credit card machines.  Some consumers complain that EFC negotiates the $495 fee for a lower rate in order to entice the consumer to join.

Consumers have indicated to BBB that they do not generate income from the website. Consumers complain that after they contact Economic Freedom Corporation regarding their failure to generate income, they are offered additional advertising services for additional fees of $1,000 to $40,000. When Consumers express concern to EFC for the large investment, EFC justifies the investment by telling consumers they will make more than their advertising investment back in 30 days. Consumers that invest in marketing programs allege the same inability to generate income after the additional investment is made. Recent complaints allege some consumers are frequently solicited by other advertising companies selling marketing for their website once they join.

The company responds to BBB by indicating that they will resolve the issue directly with the customer; however, in some cases consumers allege no contact from the company was made. Additionally, consumers allege difficulty contacting Economic Freedom Corporation by phone once their investment is made."

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