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It's not so hard to see why consumers
would be drawn to ads for business opportunities that
trumpet "be your own boss," "set your
own hours," "work from home," and "earn
money quickly." But the Federal Trade Commission
(FTC) says that business opportunity promotions like
these often are scams that take consumers' money and
fail to deliver on the promises.
Before investing in any "biz
opp," the FTC suggests that consumers:
Look at the ad carefully. If it claims buyers can
earn a certain income, it also must give the number
and percentage of previous purchasers who achieved
the earnings. If an earnings claim is there - but
the additional information isn't - the business opportunity
seller is probably violating the law.
Get earnings claims in writing. If the business
opportunity costs $500 or more, then the promoter
must back up the earnings claim in a written document.
It should include the earnings claim, as well as the
number and percentage of recent clients who have earned
at least as much as the promoter suggested. If it's
a work-at-home or other business opportunity that
involves an investment of under $500, ask the promoter
to put the earnings information in writing.
If the business opportunity is a franchise, study
the disclosure document. Look for a statement about
previous purchasers. If the document says there are
no previous purchasers but the seller offers a list
of references, be careful: the references probably
Interview each previous purchaser in person, preferably
where their business operates. The FTC requires business
opportunity promoters to give potential purchasers
the names, addresses and phone numbers of at least
10 previous purchasers who live the closest to the
potential purchaser. Interviewing previous purchasers
helps reduce the risk of being misled by phony references.
Contact the attorney general's office, state or
county consumer protection agency and Better Business
Bureau both where the business opportunity promoter
is based and where you live to find out whether there
is any record of unresolved complaints.
If the business opportunity involves selling products
from well-known companies, call the legal department
of the company whose merchandise would be promoted.
Find out whether the business opportunity and its
promoter are affiliated with the company. Ask whether
the company has ever threatened trademark action against
Consult an attorney, accountant or other business
advisor before you make the deal.
Take your time. Promoters of fraudulent business
opportunities often use high-pressure sales tactics.
But, if the business opportunity is legitimate, it'll
still be around when you're ready to decide.
The FTC works for the consumer to prevent fraudulent, deceptive
and unfair business practices in the marketplace and to provide information
to help consumers spot, stop, and avoid them. To file a
complaint or to get free
information on consumer issues, visit www.ftc.gov
or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The
FTC enters Internet, telemarketing, identity theft, and other fraud-related
Consumer Sentinel, a secure, online database available to hundreds of civil
and criminal law enforcement agencies in the U.S. and abroad.