LPM Staff

¡Cuidado! Tips on scams

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Tempted by a home-based business opportunity? Don’t sign anything yet! First:

• Look at the ad carefully. If it claims buyers can earn a certain income, then it also must give the number and percentage of previous purchasers who achieved the earnings.

• 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.

• Study the business opportunity’s franchise disclosure document. Under the FTC Franchise Rule, most business opportunity promoters are required to provide this document to potential purchasers.

• Interview each previous purchaser in person, preferably where their business operates. Interviewing them helps reduce the risk of being misled by phony references. The FTC requires business opportunity promoters to provide this contact information.

• Consult an attorney, accountant, or other business advisor before you put any money down or sign any papers.

• Contact the attorney general’s office, state or county consumer protection agency, and Better Business Bureau – where the business opportunity promoter is based and where you live – to find out whether there is any record of unresolved complaints. If you suspect a business opportunity promotion is fraudulent, report it to these agencies. File a complaint online at www.ftc.gov or call toll-free 1-877-FTC-HELP (1-877-382-4357).

• 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 if the business opportunity and promoter are affiliated with the company. Ask if the company has ever threatened trademark action against the business opportunity promoter.

• Take your time. Promoters of fraudulent business opportunities are likely to use high-pressure sales tactics to get you to buy in. If the business opportunity is legitimate, it’ll still be around when you’re ready to decide.

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