Bogus Business Opportunities
November 2011
The Federal Trade Commission (“FTC”) has established the Business Opportunity Rule to protect consumers from misleading business opportunity offers, such as envelope stuffing or vending businesses. Key safeguards include a mandatory one-page disclosure document that sellers must provide, which outlines critical information about the opportunity. This document should include details about the seller, any legal issues, cancellation policies, earnings claims, and references. Sellers must also deliver this document at least seven days before any contract signing or payment.
If earnings claims are made, a separate Earnings Claim Statement is required, providing specific details about the claims, including the percentage of people achieving those results. It's essential for potential buyers to carefully review these documents and verify their contents.
The Rule also prohibits deceptive practices, such as contradicting claims made in the disclosure documents or misrepresenting the nature of the investment. If sellers fail to comply with these regulations, it raises red flags about potential scams. Always conduct thorough research and seek written proof for earnings claims before committing to any business opportunity.
For more information, see here: https://www.ftc.gov/tips-advice/business-center/guidance/bogus-business-opportunities
These materials were obtained directly from the Federal Government public websites and are posted here for your review and reference only. No Claim to Original U.S. Government Works. These may not be the most recent versions. The U.S. Government may have more current information. We make no guarantees or warranties about the accuracy or completeness of this information, or the information linked to. Please check the linked sources directly.
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