Don't Get Taken in By Fraud, Bad Home Builders and Business Opportunity Scams!
Fraudent companies target homeschoolers, who often look for supplemental
income, and other frugal families, with schemes involving business
opportunities. These scams entice families with promises of "paying off
your mortgage," "owning your own home," and debt freedom."
"Consumers can take steps to make sure that the business opportunity
they're pursuing isn't going to cheat them out of their money. Here's how:
- Get all earnings claims in
writing. Be sure the information includes the number and percentage of
recent or current clients who have earned at least as much as the promoter
claims. If the promoter hesitates or refuses to give the information in
writing, find another business opportunity.
- Interview references provided
by the promoter of the business opportunity. The FTC requires business
opportunity promoters to give potential purchasers the names, addresses
and phone numbers of at least 10 prior purchasers who live the closest to
the potential purchaser. Talk to each prior purchaser in person,
preferably where their business operates. This may help reduce your risk
of being mislead by "shills."
- Study the business opportunity's
franchise disclosure document. Under the FTC Franchise Rule, most business
opportunity promoters are required to provide this document to potential
purchasers. It includes information about the company, including whether
it has faced any lawsuits from prior purchasers or lawsuits alleging
- Contact the attorney
general's office, state or county consumer protection agency and Better
Business Bureau in the area in which the business opportunity promoter is
based and where you live. Ask whether there's a history of unresolved
complaints. Remember that a complaint record may indicate questionable
business practices, but a lack of complaints doesn't necessarily mean the
promoter and the business opportunity are without problems. Unscrupulous dealers
often change names and locations to hide a history of complaints.
- If the business opportunity
involves selling products from well-known companies, call the legal
department of the company whose merchandise is being promoted. Find out
whether the business opportunity and its promoter are affiliated with the
company. Ask whether the company has ever threatened trademark action
against the business opportunity promoter.
- Consult an attorney,
accountant or other business advisor before you put any money down or sign
any papers. Entering into a business opportunity can be costly, so it's
best to have an expert check out the contract first. If the business
opportunity promoter requires a deposit, ask your attorney to establish an
escrow account where the deposit can be maintained by a third party until
a deal is made.
Take the time to complete each of these steps. Promoters of fraudulent
business opportunities are likely to apply high-pressure sales tactics to get
you to buy in. If it's a legitimate business opportunity, it'll still be around
when you're ready to decide."--Federal Trade Commission
For more information, visit the
Commission web site.
Have you been scammed by a fraudulent home building scheme or
panelized home builder? Do you have a "bad house?" Consumers can file
a complaint through HADD, Home
Owners Against Defective Dwellings.
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