Kinds of Claims that Could Result in Civil Penalties for Companies that sell Franchises, Business Opportunities, and Investments:
On October 26, 2021, the Federal Trade Commission (“FTC”) issued a new Notice of Penalty Offenses targeting deceptive money-making claims. This notice warns over 1,100 companies that misleading promotions related to gig work, multilevel marketing, and other money-making schemes could lead to fines of up to $43,792 per violation.
The Franchises, Business Opportunities, and Investments portal in the FTC Business Center includes links to brochures, cases, rules, blog posts, and other resources to help streamline your efforts to stay within the law.
- Misrepresenting the profits or earnings that may be anticipated by a participant in a moneymaking opportunity,
- Misrepresenting that sales of a money-making opportunity will be made to only a limited number of prospective participants,
- Misrepresenting that prospective participants will be screened or evaluated for suitability,
- Misrepresenting that participants don’t need experience in order to earn income,
- Misrepresenting that a prospective participant must act immediately to purchase or to be considered for a money-making opportunity,
- Misrepresenting that purchasing a money-making opportunity is risk-free or involves little risk,
- Misrepresenting the position being offered to prospective participants, such as by failing to disclose that it is a sales position when such is the case, and
- Misrepresenting the amount or type of training that will be given to participants.
For more information, see here: https://www.ftc.gov/business-guidance/industry/franchises%2C-business-opportunities%2C-and-investments
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