By JOE KAFKA
Associated Press Writer
PIERRE, S.D. (AP) - The scam didn't seek much money, just $20 to $60 per business. But add it up across the nation, and the sum easily could reach into hundreds of thousands of dollars, perhaps more.
The concept was simple: Send stern warnings to restaurants and convenience stores to trick them into thinking they must display posters on proper hand-washing techniques or face heavy fines. Then sell them the posters.
The mailed solicitations came stamped with such official-sounding names as the Food Service Compliance Center and looked as if they might be from the government or a government-affiliated agency.
But the misleading sales pitches were actually from a Lansing, Mich., company called the Mandatory Poster Agency. At least eight states have taken action against the company, forcing it to change its business practices and give refunds to businesses that were duped by the scheme.
"Their lawyer said they really didn't have any defense," said Maryellen Mynear of the Kentucky attorney general's office, which sued the company. "We had them fairly dead-to-rights, so to speak, in terms of misrepresentations."
The company insists it offers a valuable service by researching government regulations and providing the information to other businesses.
Before seeking new customers, the company typically obtained a local post office box and adapted its name to each state where it did business.
In South Dakota, the company mailed a flier this spring to Robin Shrake, manager of the Kick Start Travel Center convenience store in Sturgis. It offered hand-washing posters for $19.95, plus shipping of $2.95 each.
The mailer was titled "ADVISORY TO ALL FOOD LICENSEES!" and seemed suspicious. "I keep up with state requirements, and I thought it looked fishy," Shrake said.
She called the South Dakota Retailers Association and learned the notices came from 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."
Neither state nor federal law requires posting of hand-washing notices, said Shawn Lyons, executive director of the retailers group. If businesses want to post such notices, they can be obtained free from various sources or can be homemade, he said.
"These scam artists are a dime a dozen," Lyons said. "It's a constant issue for small businesses."
A recorded message at the Mandatory Poster Agency informs potential customers that its hand-washing mailers "contained certain inaccuracies."
Responding in writing to an Associated Press interview request, the company said it has changed its marketing practices "to ensure that there is no reasonable possibility of a misunderstanding on the part of the potential customer."
The company's new advertising flier clarifies that it is not a government agency and does not hold a government contract. It also states that many required safety and labor posters can be obtained free from the government.
"There is absolutely nothing misleading about our advertising circular," wrote company President Thomas Fata. "The overwhelming majority of our customers are completely satisfied with their purchase."
Among states that have taken action against the company, Kentucky and Michigan went to court to obtain refunds, as well as orders forbidding the company from sending misleading solicitations.
Illinois, North Carolina and Idaho reached similar legal settlements earlier this year. North Dakota ordered the company to clean up its act last September, and West Virginia authorities won refunds in 2001.
Last month, South Dakota officials warned businesses not to be hoodwinked by the company.
Small businesses can be easy prey for scammers with such crafty sales tactics, said Wanda Delaplane, an assistant attorney general who handled the case in Kentucky.
"They concentrate on small business people who are seeking to run their businesses correctly," Delaplane said. "And most of them are extremely busy and don't want to run afoul of any regulations."
(Copyright 2007 by The Associated Press. All Rights Reserved.)