Don’t Be Mislead by BizOp Ads

Market Watch:

Ads for business opportunities often make promises of big cash benefits for very little effort. But the Federal Trade Commission has found that many business-opportunity promotions are little more than scams to take money from consumers.

• Read the ad carefully. If it boasts that buyers can earn a specific amount of income, make sure it also gives the number and percentage of previous buyers who made that amount.
• Seek advice. Talk to your attorney or other business adviser before you sign anything or put any money down.
• Get everything in writing and earnings claims in particular. According to the FTC, if the business opportunity costs you $500 or more, the claim must be backed up in writing and also include the number and percentage of recent clients who have achieved the suggested earnings. Even if the investment opportunity is less than $500, still ask the promoter to give you a written statement.
• Look into the business opportunity’s history. Under the FTC franchise rule, most business-opportunity promoters are required to provide a franchise disclosure document to potential purchasers. This will tell you whether the company has faced lawsuits from previous buyers and whether fraud was alleged. If the document lists no names, be skeptical if the promoter offers a list of references — they’re often fake. Also check with the attorney general’s office, your state and county consumer protection agency and the Better Business Bureau to see if complaints have been made.
• Interview previous buyers. The FTC requires that you be given the contact information of at least 10 previous purchasers who live in your area.

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