The Federal Trade Commission recently halted an online, work-from-home, business coaching scheme. Consumers were conned out of millions of dollars with promises of making thousands per month by purchasing bogus business coaching services to start Internet businesses.
Using more than a dozen different business names, the defendants bilked consumers in three phases. An introductory work-at-home kit was sent first. Next a business coaching service was offered for a larger fee. Finally add-on services like business formation help, website design and development, and accounting and tax filing services were pushed on consumers. The marketers promised quick recovery of the thousands of dollars in fees through proven success of the opportunity.
Many work-from-home and online business opportunities are scams. These sales pitches usually have few details and use high-pressure tactics. Some other signs that a deal is shady include promises of big money for simple tasks, up-front payment requests and wire transfer requests.
Before you invest in a business opportunity, the Better Business Bureau offers these tips against fraud:
• Research the company and its owner online with the words “complaint” and “scam.” Check for complaints with the BBB, the state attorney general’s office and the local consumer protection agency both where you live and where the business is based.
• Be aware that a lack of complaints does not mean the business is legitimate.
• Consider the opportunity carefully. Are promises made but very little proof given? The Business Opportunity Rule, enforced by the FTC, requires businesses to present you with disclosure documents that include the identity of the seller, information about lawsuits or other legal actions involving the business or its employees, cancellation and refund policies, an earnings claim statement if earnings are promised and a list of references.
• Interview references in person to reduce the risk of encountering a fake reference.
• Consult an attorney, accountant or business adviser before signing any contract. If you’re worried that a home-based business opportunity may be fraudulent, call the BBB at (509) 455-4200 or visit www.bbb.org for assistance. You can also file a complaint with the BBB, the FTC at ftc.gov/complaint and the Washington State Attorney General’s Office at www.atg.wa.gov/fileacomplaint.aspx.
Erin T. Dodge, BBB editor