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overpriced or outdated products along with unprofitable locations.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
PRODUCTS, $45K P/T - $150K F/T, NO SELLING REQUIRED
and operate KODAK product PROFIT CENTERS
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
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
"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
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
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
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
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
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
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
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
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
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
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
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
Patrick O'Neill 09/22/02
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. 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.
|THE HANNA GROUP
Lenexa, Kansas 66285-4304