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Businesses bilked by poster company

Joe Kafka, The Associated Press | Posted: Friday, June 8, 2007 11:00 pm | (0) Comments

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buy this photo Shawn Lyons, executive director of the South Dakota Retailers Association, said this past week that businesses must be on constant alert for scam artists. He said a frequent scam involves a firm that tries to get businesses to buy posters about state and federal regulations. Those posters can be obtained for free, Lyons said. (Photo by Joe Kafka, The Associated Press)

PIERRE - Robin Shrake knew something wasn't quite right when she received a flier this spring with a stern notice about hand-washing posters she'd need for her Sturgis convenience store.
"I keep up with state requirements, and I thought it looked fishy," said Shrake, the manager of the Kick Start Travel Center in Sturgis.
The official-looking mailing offered hand-washing posters from something called the South Dakota Food Service Compliance Center. The posters cost $19.95 each, plus $2.95 shipping.
The notice typically begins with: ADVISORY TO ALL FOOD LICENSEES!
Shrake didn't bite. She called the South Dakota Retailers Association, which told her that notices about required hand-washing posters from the South Dakota Food Service Compliance Center are a crafty scheme by a company trying to make an easy buck.
"It infuriates me," she said. "It's really sad because a lot of businesses could get this information and assume that it's something that's required by law."
It was all part of a long-running scam of small individual consequence - a mere $20 to $60 per business. But add it up across the nation, and the sum easily could have reached into hundreds of thousands of dollars, perhaps more.
The concept: Trick businesses that serve food into thinking they must purchase and display posters on proper hand-washing procedures or face possible heavy fines and other sanctions. To the unsuspecting, they might have come from a government agency or a firm closely connected with the government.
In reality, the misleading sales pitches were from a Lansing, Mich., firm that has been successfully sued for questionable practices and has settled in several states by agreeing to change its ways.
Many of the businesses that bought posters from the Mandatory Poster Agency, also known as the Food Service Compliance Center and various other names, have gotten their money back.
The Michigan firm gets a local post office box and adapts its name to correspond to each state where it seeks customers.
The firm, however, insists to The Associated Press that it provides a valuable service by researching government regulations and providing the information to businesses wanting to be sure they comply with food-safety and labor regulations.
That spin does not impress state authorities who have cracked down on MPA. Kentucky, Michigan and Illinois have gotten court orders this year to throttle the firm. It was the second time in recent years that Michigan authorities sued the business.
The firm also has been fined by several states.
In South Dakota, businesses were warned last month not to be hoodwinked by the poster company.
Officials in several states have forced MPA to provide refunds to businesses that purchased the deceptive food-safety posters.
"We sued them and got a temporary restraining order," said Maryellen Mynear, litigation branch manager in the Kentucky attorney general's office. "Their lawyer said they really didn't have any defense. We had them fairly dead-to-rights, so to speak, in terms of misrepresentations."
When the lawsuit was filed in October, Kentucky Attorney General Greg Stumbo said MPA's solicitations contained false and misleading information.
"These mailings were sent for the purpose of scaring small businesses into ordering posters which are not required by law," Stumbo said.
Neither state nor federal law requires posting of hand-washing notices, said Shawn Lyons, SDRA executive director. If businesses want to post such notices, they can be obtained free from various sources or can be homemade, he said.
Mandatory Poster Company is one of many firms trying to trick business owners into buying products or services, Lyons said.
"These scam artists are a dime a dozen," Lyons said. "It's a constant issue for small businesses."
SDRA has 3,800 members, and they often are quick to contact the organization to see if they're being scammed or to report scams, he said.
"We've stepped up our efforts to make businesses aware of the perils," Lyons said. "We have a close relationship with the attorney general's office and Better Business Bureau, and that comes in handy when something suspicious like this poster offer comes along."
A recorded message at MPA informs potential customers that its hand-washing mailers "contained certain inaccuracies."
Responding in writing to an Associated Press interview request, Thomas Fata, Mandatory Poster Agency president, said it has changed its marketing practices throughout the country "to ensure that there is no reasonable possibility of a misunderstanding on the part of the potential customer."
The firm's new advertising flier makes it clear that MPA is not a government agency nor does it hold a government contract, and it states that many safety and labor posters that are required can be obtained free from government agencies.
"There is absolutely nothing misleading about our advertising circular," Fata wrote. "The overwhelming majority of our customers are completely satisfied with their purchase."
In Kentucky, a February court order forbids the firm from sending solicitations with "false, misleading or deceptive information" to businesses.
All Kentucky businesses that ordered posters from the Michigan firm got their money back as a result of the order, said Wanda Delaplane, an assistant attorney general who handled the case. The refunds totaled about $12,000.
Small businesses can be easy prey for scammers who use questionable sales tactics, she said.
"They concentrate on small business people who are seeking to run their businesses correctly, and most of them are extremely busy and don't want to run afoul of any regulations," Delaplane said.
Michigan obtained a court order against MPA last month. The order requires refunds and prohibits the firm from deceptive marketing practices. Illinois and North Carolina reached similar legal settlements with the firm in February, and Idaho did likewise in March; North Dakota ordered MPA to clean up its act last September.
Officials in other states took aim much earlier at MPA. West Virginia authorities won an agreement for refunds in 2001 after determining that the firm engaged in "wide range of unlawful practices."

Posted in Top-stories on Friday, June 8, 2007 11:00 pm

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