FTC Probe Uncovers Invention Scams

by Angela Daughtry, Staff Writer, Woodshop News, Feb. 1999

A federal investigation called "Project Mousetrap" has nabbed several invention-promotion companies, forcing out-of-court settlements that will reimburse bilked inventors.

According to Federal Trade Commission (FTC) spokesman Howard Shapiro, the companies, involved in false promotion services, will be paying out over $1 million in redress to would-be entrepreneurs bilked out of their money.

According to Shapiro, consumers have paid up to $10,000 to companies that claim to have development and marketing services for new inventions. The companies will accept virtually any invention for promotion, but give little or no real services, he said.

"What the commission takes issue with is the glowing promises that these companies make and then fail to deliver," Shapiro said. "You go to one of these firms, and they tell you exactly what you want to hear." In reality, according to Shapiro, only 1-2 percent of all new products ever make it to the market shelf.

"Mousetrap was a coordinated effort between the FTC and a few of the states, Florida, New Jersey and Pennsylvania, which brought their own state actions against companies operating in their area," Shapiro said. The FTC normally gets its information to bring a law enforcement action in one of four ways: consumer complaints, competitors' complaints, FTC staff's own investigation into something that crosses their desk or catches their eye, and in some cases we are asked by Congress to look at something."

Shapiro stressed the need for aspiring inventors to educate and inform themselves before shelling out any money.

"As important as the agency's law enforcement actions are, consumer education is twice as important," he said. "The commission has available hundreds of consumer brochures, fact sheets, consumer alerts and dozens of guides. There are legitimate inventor's organizations out there that can provide you with good, sound advice."

"You should obtain advice from the United States Patent and Trademark Office," he added.

On good place to start is the FTC's Web site, www.ftc.gov, which Shapiro described as both informative and user-friendly. An FTC 800-number is also in the works. Another source is the National Congress of Inventors' Organizations at Web address: www.inventionconvention.com.

Although there have been consumer-protection laws on the books for many years, Shapiro said inventors who decide to use promotion and development services must still exercise caution. One way, he advised, is to find out the company's true success. "In other words," he said, "you say, 'You've developed this new fly swatter? Where can I buy it?'"