In "Smart Business," Jim Olszytnski expounds on the frustrating nature of legal hustles.

Never mind Enron, WorldCom and all the other major league business scandals from a few years ago. Big shots are going to jail, accounting reforms have been enacted, and there's reason to believe big corporations are behaving better, if only because of more intense scrutiny.

What largely escapes the media's attention, however, is a disturbing array of smaller scale hustles masquerading as legitimate businesses. They come in below the radar because they are, for the most part, legal enterprises involving esoteric services - or the illusion thereof. Some entail relatively trivial sums of money but victimize many people. Collectively, they attest to the fact that too many people are earning livings as modern-day snake oil peddlers.

I'm not talking about outright robbery and con games. They at least are defined as crimes, and law enforcement provides some degree of protection against them. The activities referred to here all fall within the letter of the law, but are sordid nonetheless. It's important to keep in mind that just because something is legal, doesn't mean it's right. In fact, many of the activities reported here stem from the purposeful exploitation of legal loopholes. The American legal profession swarms with moral morons who think as long as something is legal, that's all that counts. Examples abound.

Class Actions Lawsuits

This is one of our country's main growth industries. Lawyers prowl the Internet looking for reports of minor misdeeds by businesses - real or imagined - then file lawsuits on behalf of thousands of supposedly injured plaintiffs, most of whom don't even know they have a grievance. When settlements or judgments get rendered, the anonymous plaintiffs end up with a few extra pennies in their pockets while the lawyers rake in millions.

Years ago, as a frequent air traveler, I was one of the lucky beneficiaries of a class action suit against an airline company. One day, I received a voucher in the mail entitling me to something like five bucks off a future plane ticket - whoop-dee-doo. I never cashed it in. Partly that was in protest against the class action system, but I also seem to recall that the redemption procedure was rather cumbersome and would have taken much more than $5 worth of a person's time. I can't remember what the airline did wrong, except that it was too innocuous for passengers to notice, care about or as just shown, remember what it was all about.

Nonetheless, many millions of dollars got transferred from a now struggling major airline into the coffers of an enterprising law firm.

Class action litigation has become so prevalent that there is a movement in Congress to rein it in. However, the trial lawyers are adept at depicting everything they do as sticking up for the little guy against big, greedy corporations, so the legislation goes nowhere. Problem is, there's nobody to protect us against the big, greedy law firms.

Artificial Patent Lawsuits

Loopholes in our patent system make it possible to obtain patents based on simplistic explanations of how certain things work. The case I'm most familiar with involved a schematic of e-commerce transactions. Theoretically, anyone who sells anything over the Internet could be charged with infringing on such a patent, but the perpetrators would never dare sue Amazon, eBay or anyone else with deep enough pockets to call their bluff and fight the silly case in court.

Instead, the perpetrators target small businesses of a certain size that their research shows have enough money to afford a settlement ranging to tens of thousands of dollars, but not enough to outlast them in drawn-out court proceedings that could end up costing 10 times as much. It's a thoroughly legal form of extortion. While not widespread, this gambit has succeeded in picking the pockets of some stunned small e-commerce entrepreneurs.

Invention Marketing

Invention marketing firms sucker garage-shop tinkerers into believing their Rube Goldberg contraptions have vast money-making potential. They maintain a fig leaf of legitimacy by turning down perpetual motion machines and other devices that defy natural laws - and which might get them in trouble with man-made laws. But otherwise, few ideas are so wacky they'd decline to go through the motions of trying to bring it to market.

The inventors end up paying thousands of dollars in fees for half-baked market research and useless press releases sent to people like me. Rarely, if ever, does a client make a cent off the inventions submitted to these companies, and just in case one does stumble into a licensing agreement, the invention companies make sure there are documents signed that entitle them to a large chunk of the royalties. But don't bother asking these companies to represent an invention on a contingency basis. They make their money off of the fees, with royalty dollars few and far between.

I've written about these businesses in the past and asked a few of them to direct me to inventions they have sponsored that ended up being successfully marketed. I've yet to hear of one.

Deceptive Yellow Pages Directories

These are based on dubious themes such as a state services directory which lists firms that have facilities in a given state. They get distributed to the firms that buy listings and supposedly to state offices that have an interest in throwing business to state residents. You could conjure up a small sliver of value to that, except the hustle becomes apparent when you see the painstaking deception used in the solicitations for paid listings.

They are purposely designed to look like invoices, with disclaimers shaded in such as way as to escape notice. The amount charged usually is under $100, which is not enough to ring alarm bells in a harried accounts payable clerk cutting checks for dozens of routine bills. The directories are low-budget publications with suspect distribution. Those not thrown out the moment they arrive tend to gather dust in drawers.

This is a fairly common scam that capitalizes on the proliferation of Yellow Pages directories in metropolitan markets. Some con artists take the money without ever publishing a directory, but that descent into outright criminality is stupid. Printing and distributing shoddy books can be done on the cheap with plenty of profit left over and leave you on the right side of the law.

Phony Phone Charges

Telephone companies are obligated by law to bill customers for various third-party services supposedly ordered by telephone users. Modern phone bills are long and complicated, and many people don't take the time to review all the line items, so it's easy for shady businesses to slip in charges unnoticed.

Thus, many people unwittingly pay $9.95 a month for a psychic hot line service or some such. It happened to me a few years ago, until I sent a letter to the company demanding a full refund of every cent I spent with them. I copied the consumer fraud office of my state's attorney, which did the trick in obtaining a full refund.

Recently, I read an article saying that bogus phone charges are a favorite new gambit of organized crime. Nobody in my family ever knowingly authorized payment for a psychic hot line, so it appears that this scam may cross the line into illegality. However, few people are going to make a big stink about rip-offs amounting to less than $10 a month, and law enforcement officials have higher priorities. Tedious as the task may be, I've learned to take time to review my phone bill at least every few months.

There are many more legalized con games to report. I haven't even mentioned all the Internet spam scams, because most of them are so transparent only the most stupendously gullible folks are likely to fall for them. People that logically challenged probably don't spend much time reading articles that try to convey common sense.

Those of you who are reading this ought to feel good about being associated with an industry of hard-working, industrious people who truly earn their keep in our society.
ND