olumbus, Ga.-based Merchant Payment Solutions, Inc. (MPS), a promoter and seller of mini-ATM business ventures, recently settled with the Federal Trade Commission over charges that the company misrepresented potential earnings to prospective buyers of its business opportunities.

MPS was one company of 77 targeted in a law-enforcement sweep called "Project Busted Opportunity" led by the FTC, Department of Justice and 17 state policing agencies. MPS was promoting its mini-ATM business opportunities or "franchises" through a Web site, www.mini-atm.com. On the Web site, interested parties were urged to call a toll-free number to learn more about the business. The Web site is no longer online.

In its complaint, the FTC alleged that MPS and its President, Steven Todd Knight, misrepresented the earnings potential of MPS' mini-ATM business by suggesting that an ATM placed in a location visited by 500 customers a day would generate approximately $450 in profit per month.

The FTC also alleged that MPS did not back up these earnings claims, which is a violation of the FTC's Franchise Rule. The Franchise Rule requires a franchise to provide prospective franchises with a "complete and accurate basic disclosure document containing 20 categories of information, including information about the litigation and bankruptcy history of the franchisor and its principals," and to disclose the number or percentage of prior purchasers known by the franchise to have achieved the same or better results.

Under the terms of the settlement, Knight and MPS are required to pay a $22,000 fine for consumer redress, are prohibited from making false claims regarding any business venture and are required to comply with the Franchise Rule. The FTC will continue to monitor MPS' records.

"Business-opportunity scams and work-at-home schemes are frauds that can cost consumers their life savings and destroy their dream of owning a successful small business," J. Howard Beales III, Director of the FTC's Bureau of Consumer Protection, said in a statement.

Project Busted Opportunity used undercover agents and technology to "sting" businesses such as MPS that allegedly were using deceptive earnings claims and paid-off individuals or "shills" to provide misleading references about the fraudulent business ventures and verify earnings claims. Investigators posed as prospective investors and listened to sales pitches from the companies' operators who hyped the business.

Businesses targeted in the sting ranged from work-at-home envelope stuffing and work-at-home medical-claims processing to vending machine and mini-ATM businesses.

MicroFinancial, Inc.'s subsidiary, Leasecomm Corp., also settled this year with the FTC over charges that Leasecomm allegedly financed "get-rich-quick schemes" of vendors that targeted consumers for entrepreneurial-style business opportunities ("Leasecomm Settles with FTC, Cancels $24 Million in Customer Debt," The Green Sheet, June 23, 2003, issue 03:06:02), such as Internet Web malls, multilevel marketing programs, medical billing software and coupon-clipping programs that are typically featured on infomercials and at conferences.

As part of the settlement, Leasecomm renounced $24 million in court judgments against its customers and agreed to amend its leasing contracts and debt-collection practices.

Leasecomm denied any unlawful activity.

The Leasecomm settlement was not part of the FTC and DOJ's Project Busted Opportunity.