Skip Tolls on ‘Free Money’ Path, Consumers Warned

Free government money for a new home or business. Who wouldn’t want some?

But consumer advocates warn that organizations charging top dollar for access to alleged mountains of free money should be avoided. One such business, New York-based National Grants Conference, begins a series of seminars today in the Los Angeles region, promising to “tell where government money is and how to get it!”

“If you don’t have to pay it back, it’s actually FREE MONEY!” blared a full page ad in the Los Angeles Times on Monday. The cost of attending the conferences--to be held in Los Angeles, Newport Beach, Long Beach, Ontario and Pasadena--is $10. But disgruntled customers around the country say that buys little more than an hours-long sales pitch for access to further resources, at a cost of $695 to $799.

The Better Business Bureau in Buffalo, N.Y., has received nearly 500 inquiries and 10 complaints about the Rochester-based company, incorporated as Proven Methods Inc. The complaints, from states including Ohio, Texas, Missouri and Arizona, address the company’s selling and refund practices, product delivery and quality.

Better Business Bureau manager of business ethics Dave Lukow said the bureau is revising its report on NGC to note a “pattern of complaints.” The company has not received an unsatisfactory rating because the volume of its business is large in relation to complaints, he said. But the bureau has noted mounting inquiries with concern. Of 472 consumer inquiries since 1997, 297 were logged last year and 104 since January.

NGC’s attorney, Peter Hoppenfeld, said the complaints are minimal compared with the half a million people who have attended seminars. The company doesn’t track success rates but has “hundreds of testimonials” from satisfied consumers, he said.

“Each and every person who has ever requested a refund has gotten their money back,” he said.

The company has lured people across the country to seminars through advertisements and infomercials, which hold out the promise of access to obscure government grants and low-interest loans for first homes, home renovations, business start-ups and expansion.

However, business and housing advocates say virtually no grant money is available for these purposes. The government does offer loan guarantees and free business counseling, while some loans and grants are available to first-time home buyers who meet strict eligibility requirements. But experts say consumers shouldn’t pay big fees for this information, which is available free or at low cost through many public and nonprofit agencies.

Promises of free money attract vulnerable consumers.

Dallas-area resident Kathy Allen, a medically disabled mother of three, said she and her husband attended in hopes of finding free money to start a home-based Internet business but were given no information.

Houston paralegal Bett Sundermeyer was coaxed to attend by her 65-year-old mother, who was looking for free funds to expand her dog-breeding business. They balked when told that the $799 cost would rise by several hundred dollars unless they signed up that day.

The Federal Trade Commission, which polices deceptive practices, warns consumers to be wary of promises of free money or cheap loans, and to treat success “testimonials” with caution. Of eight testimonials featured in NGC’s newspaper ad, four did not use NGC’s services, the fine print states. Of those who did, one is the company vice president, and another is a relative of an NGC executive.

Hoppenfeld said those people were chosen because they were featured in infomercials.

Entrepreneurs seeking information on government funding can visit the U.S. Business Advisor at https://www.business.gov. A guide to local government-subsidized business services is available at https://mboc.lacity.org.

For information on housing programs, contact your local Neighborhood Housing Services organization.

Also, San Diego-based Affordable Housing Applications, Inc. publishes a “Southern California Guide to Homebuyer Programs” for $19.95.