The Inside Scoop from the Bizopp Cops

When the economic climate is uncertain, people tend to evaluate their options:  Is a career move in the cards?  Can a home-based business supplement my salary?  Is now the time to be my own boss?

But if there's one lesson from Operation Empty Promises — a federal-state sweep involving more than 90 law enforcement actions — it's that entrepreneurs should take their time and resist high-pressure tactics when operators claim to have the inside track on enhanced income.

Considering a business opportunity?  Here's more advice from the bizopp cops:

Read the ad carefully.  If promotional materials claim buyers can earn a certain income, they also have to give the number and percentage of previous purchasers who got those results.  If an earnings claim is there — but the additional info isn’t — the seller is probably violating the law.

Get it in writing.  If the business opportunity costs $500 or more, the promoter may be required to back up those claims in a document that includes the number and percentage of recent clients who’ve earned at least as much as the promoter says. Even if you’re shelling out less than $500, it’s still a good idea to get earnings claims down in black and white.

Study the paperwork.  Under the FTC's Business Opportunity Rule, most promoters have to give you certain documents disclosing if they’ve faced any lawsuits from previous purchasers or lawsuits alleging fraud.

Interview previous purchasers in person. The FTC requires business opportunity promoters to give you contact information for at least 10 previous purchasers who live closest to you.  Ask them candid questions and keep an ear attuned for people who paint too rosy a picture.

Search online.  Enter the company name (or the name of the CEO or president) and words like “complaints” or “scam.”  Of course, unscrupulous dealers often change names and locations to hide a checkered history, so a search that yields no results isn’t necessarily a green light.

Verify big-name connections.  Does the business opportunity claim you'll be selling well-known products?  Call the legal department of the famous company directly to see if the bizopp is really affiliated with the brand name.

Talk it over with an expert.  Consult an attorney, accountant, or other business advisor before signing anything or handing over any money.  Is the promoter telling you to act now and that you don't have time to consult with trusted colleagues?  That phony-baloney sense of urgency is the hallmark of a bizopp shark.

The promise of a money-back guarantee is no substitute for checking out the offer.  Scammers often tout their “easy” refund policies — and then make it next to impossible to get your money back.  Guarantees are great, but they can't take the place of pre-purchase investigation. 

Researching your next career move?  Check out the Business Center's Franchise & Business Opportunity page for more on evaluating your options.  Download this quiz to see if you're schooled on the signs of an employment scam.

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