IF YOU don’t have a job, it is easy to be enticed by postings offering new business deals that claim you can be your own boss and make over $100,000 a year. Before even considering a new business opportunity, the Houston Better Business Bureau warns that it is critical that you read all documents closely before signing to make sure the new business deal isn’t a scam.
It is easy to immediately want to sign something that promises you a lot of fast money, especially in today’s economy. However, when sellers promise consumers a significant amount of money, it is often a scam.
According to the Federal Trade Commission’s Business Opportunity Law, salespeople asking you to sign on the dotted line or send money for a business opportunity must provide a disclosure statement and an earnings claims statement.
The BBB urges people to carefully read the disclosure document because it must identify the seller, mention the new business refund or cancellation policy, say whether the seller is making an earnings claim, mention lawsuits against the seller and must provide a list of references. The earnings claim statement must tell how much money a person could earn. The statement must include the name of person making the claim, the specifics of the claim, the start and end dates earnings were achieved and the numbers and percentages of people who got the results the seller claimed are true.
A recent victim of a new business opportunity scam from Zaken Corporation told the BBB that they were sent a mailer about an opportunity. The victim was out of work and desperate to try something so they sent them their last $100. After reading the documents the victim called to cancel within the allowed time period and had trouble reaching them. Then the company refused to refund the money because the victim had gone past the allowed time.
The BBB offers the following tips:
• Study all documents before signing or sending money. Take a careful look at the disclosure document, earnings claim and contract. Make sure each document is specific and is clearly laid out.
• Interview current owners of the seller’s business opportunity. Ask these people all the tough questions you have. For example, ask if the disclosure document matches with their actual experience.
• Require proof from the earnings claims’ statements. For statements such as “Earn up to $10,000,” it is your right to ask for proof.
• Listen to sales presentations closely. Make sure you understand every aspect of the new business opportunity. Pay attention to what the seller is trying to sell to you.
• Consider getting professional advice. In these kinds of situations, lawyers, accountants or business advisors are always willing to look over the paperwork before you sign.
• Do internet searches for the seller. Check for any complaints or scams associated with the company by looking at websites such as Better Business Bureau and State Attorney General’s office. Remember, having zero complaints doesn’t necessarily make a company legitimate.
Jordan Rzad is the senior director responsible for internet marketing at Houston Better Business Bureau.