SEC Investigating Web-Savvy Pyramid Schemers

SEC Investigating Web-Savvy Pyramid Schemers

pyramid-schemePyramid schemers had better watch out. According to The Wall Street Journal, the Securities and Exchange Commission (SEC) is on the lookout for web-based pyramid schemes that may be exploiting the booming direct-sales industry.

Investigations are actively under way and at least one company has already been shut down by the SEC as a result of allegations it was nothing more than a “fraudulent $129 million pyramid scheme.”

Direct sales can be an extremely profitable business model. With more than 16.8 million Americans being employed in the direct sales industry, it is no real surprise that web-savvy con artists are interested in tapping into the industry’s success.

The problem is, these individuals are looking for an easy way to make money without having to sell a lot of product or offer a service people can use. This is what the pyramid scheme is all about.

The Basics About Pyramid Schemes

A basic idea behind the pyramid scheme is that the more people you recruit to “work” under you, the more money you will make. It is a multi-level marketing program where success is based on the number of people you can recruit, the number of people they can bring in under them, and so on. The people at the top of the pyramid stand to make the most money, as the people lower down are simply paying off the people who invested above them. Should recruiting action slow down or come to a halt, the money source will quickly dry up and the scheme will fall apart.

Joseph Mariano, of the Direct Selling Association, says pyramid schemers have evolved over the years and are now extremely adept at making their scheme appear as if it is a legitimate business. If you are involved in direct sales and more emphasis is placed on recruiting family and friends to join you in your direct-sales activities, or the list prices on items you are supposed to sell seem overly inflated, you may be involved in a pyramid scheme.

Internet Schemers: Putting a New Twist on a Very Old Type of Fraud

The SEC’s enforcement chief has stated that, “Fraudsters are leveraging social media to put a new spin on an old type of fraud.”

Platforms such as Twitter, Facebook, Instagram and others are prime places for these people to market their schemes, solicit recruits and entice others to join in. Others who come in on lower levels of these pyramid schemes may also consider social media as a way to boost income.

Unfortunately, The New York Times reports many such marketing offers are simply too good to be true. Creating fake friends (bots) on social media, and offering their services, has become its own pyramid scheme. Twitter reported to the SEC that approximately 23 million of its accounts are bots (fake accounts) and Facebook states it finds between 67 million and 137 million fake accounts each year.

Fake friend creators charge people who are interested in increasing the number of followers they have or in having their products and services promoted, yet deliver no discernible results. Companies and individuals who pay these types of schemers are often left with nothing more than false, inflated numbers.

The Wall Street Journal: SEC on Lookout for Web-Based Pyramid Schemes
Securities and Exchange Commission: Pyramid Schemes
The New York Times: Social Media Bots Offer Phony Friends and Real Profit

Supreme Court Rules Against Employees in Integrity Staffing Solutions Inc. Appeal

Supreme Court Rules Against Employees in Integrity Staffing Solutions Inc. Appeal


In the closely monitored high profile case of Integrity Staffing Solutions, Inc v. Busk, the United States Supreme Court has ruled that internet retail giant Amazon and its contracted employment agency, Integrity Staffing Solutions, are not required to pay employees for the time they spend waiting to be screened after they clock out from work. The original lawsuit stated that employees must wait up to 25 minutes every day just to pass through a security checkpoint, and that the wait is not optional.

In its decision, the Supreme Court noted that waiting in line does not pass the test of being “integral and indispensable” to their jobs, as is required by federal law. If the Supreme Court had ruled in favor of the employees, the decision would have had sweeping implications for other businesses that require their employees to pass through security checkpoints before leaving work.

Lawsuit History

The lawsuit was originally filed in 2010 by two employees who worked at one of Amazon’s facilities in Nevada. The employees contended that the security checkpoints were understaffed, and shifts for multiple employees ended at the same time. So, the lines to leave were often very long. They, and others, believed that because the security checkpoints were not optional they should be compensated for their time. The employees also believed that Amazon should be required to implement measures that would reduce the time spent waiting in line. A district judge did not buy the employee’s argument and dismissed the original suit.

On appeal, the lower court’s decision was reversed by the U.S. Court of Appeals for the 9th Circuit, where it was determined that the security checkpoints were in fact relevant to the employee’s jobs, and the searches benefitted the company. As a result of the court’s reversal, an appeal was then filed by Integrity Staffing Solutions, and it was heard by the Supreme Court.

The Supreme Court’s Response

In his response, Supreme Court Justice Clarence Thomas wrote that Amazon “did not employ its workers to undergo security screenings, but to retrieve products from warehouse shelves and package those products for shipment to Amazon customers.” Thus, the act of waiting to be screened cannot be categorized as “integral and indispensable” to the job. In addition, Justice Thomas wrote that the argument made by employees that methods could be used to reduce waiting time should be “properly presented to the employer at the bargaining table, not to a court.”

Justices Elena Kagan and Sonia Sotomayor agreed with the Court’s decision. They, too, made a distinction between the processes of checking in and out of work and actually performing assigned tasks. Since the security checkpoints are not relevant to the work performed, they argued, the company isn’t responsible to pay its employees for the time they spend going through the screening process.

Echoing the sentiment of the other judges, Justice Antonin Scalia stated during the proceedings that the search “is not part of the job”. Chief Justice John G. Roberts Jr. went even further, saying “No one’s principal activity is going through security screening. He hires them to do something else and then the employee screening is certainly not the principal.”

The case of Integrity Staffing Solutions, Inc v. Busk was critical because if the Supreme Court had sided with the employees, the decision would have set a nationwide precedent. The domino effect would have eventually resulted in hundreds of millions of dollars being paid to employees in nearly every industry.

It’s Not Just Customers Who Can Slip and Fall; Employees Also Face Risk

It’s Not Just Customers Who Can Slip and Fall; Employees Also Face Risk

slip-and-fallThe busy holiday shopping season coincides with the onset of winter weather in Virginia, which can create slippery walking surfaces in and around shopping centers due to rain, snow, ice and snowmelt. While this can create a treacherous situation for customers, it can also lead to slips and falls for retail employees during their busiest time of the year.

These slips and falls by employees at shopping centers, malls, stores and other retail establishments can lead to workers’ compensation claims, not to mention painful injuries for employees.

According to the National Institute for Occupational Safety and Health (NIOSH), risk factors for slips and falls in the workplace include: ice, snow and rain; loose mats or rugs; spills; poor lighting; and walking surfaces in disrepair. NIOSH recommends taking steps to prevent workplace falls, such as placing signs when surfaces are wet, using slip-resistant mats, installing proper lighting and choosing flooring material that will reduce the chance of falls.

The Cost of Slips and Falls on the Job

Falls are serious business for employers and employees. Statistics from the National Floor Safety Institute indicate:

  • Falls account for more than 8 million emergency room visits, and slips and falls account for more than 1 million visits, or 12 percent of all falls.
  • Fractures often are the most serious consequences of falls, and occurring in 5 percent of people who fall.
  • Slips and falls represent the primary cause of lost days from work due to occupational injuries.
  • Slips and falls are the top cause of workers’ compensation claims and are the leading cause of occupational injury for people age 55 and older.
  • According to the Consumer Product Safety Commission, floors and flooring materials are the direct cause of more than 2 million fall injuries yearly.
  • 85 percent of worker’s compensation claims stem from employees slipping on slick floors, according to Industrial Safety & Occupational Health Markets 5th Edition.

Preventing Falls at Retailers

Zurich Services Corporation’s “Slips, trips and falls for retail,” offers a 10-point program meant to guide to help retail management teams reduce and control slips and falls in the retail environment. It indicates that business owners or managers must work to maintain safe walking surfaces at all times, especially when snow and ice are present.

The guide recommends slip-resistant flooring for retail outlets, citing studies that indicate 80 percent or more of the moisture on employees’ and customers’ shoes can be removed with the addition of quality entrance mats at store entrances.

The guide also reported that the average workers’ compensation claim value for slip, trip and fall accidents over a five-year period was $26,460, with falls related to ice and snow having an average claim value of $28,218.

Making a Claim for Workers’ Compensation After a Fall

In Virginia, all workers, including retail employees, may be eligible for workers’ compensation benefits if they have a slip-and-fall accident while on the job. If you need emergency medical treatment after the accident, make sure to tell the medical team you were injured on the job.

If you have been injured on the job in Virginia, you should file a claim with the Virginia Workers’ Compensation Commission. You should report the injury to your employer immediately – no later than 30 days from the date of the accident – and file a claim with the commission within two years of the accident.

Your employer may arrange for you to see a doctor after your accident. The employer should also file a report of the accident within 10 days. It’s also a good idea to seek help from an experienced workers’ compensation lawyer if you have suffered a fall while on the job.