Red flags to watch for when considering work-at-home opportunities

The Federal Trade Commission (FTC) recently announced impending changes to its Business Opportunity Rule that will ensure that consumers have the information they need when considering buying into or taking part in work-at-home programs or other business opportunities.

The Better Business Bureau of Minnesota and North Dakota (BBB) regularly receives inquiries from the public regarding questionable work-at-home offers. In virtually every case, the claims of individuals or companies offering vague promises of earning easy riches by working from home prove to be false, misleading or even illegal.

“These new protections the FTC is offering to consumers are of special interest to us, as the BBB receives numerous calls from consumers interested in work-at-home offers every day,” stated Dana Badgerow, President and CEO of the BBB. “The industry is so rife with fraud we have no choice but to constantly maintain a close watch on it.”

The changes to the Business Opportunity Rule, which will be effective on March 1, simplify the disclosures that business opportunity sellers must provide to prospective buyers. The simplified disclosures will help prospective purchasers assess the risks of buying a business opportunity, while minimizing compliance burdens on businesses.

In addition, the Final Rule applies to business opportunities previously covered under the Business Opportunity Rule, as well as work-at-home offers such as envelope stuffing and craft assembly opportunities. The Final Rule requires business opportunity sellers to give consumers specific information to help them evaluate a business opportunity. Sellers must disclose five key items of information in a simple, one-page document:

the seller's identifying information;

whether the seller makes a claim about the purchaser's likely earnings (and, if the seller checks the "yes" box, the seller must provide information supporting any such claims);

whether the seller, its affiliates or key personnel have been involved in certain legal actions (and, if yes, a separate list of those actions);

whether the seller has a cancellation or refund policy (and, if yes, a separate document stating the material terms of such policies); and

a list of persons who bought the business opportunity within the previous three years.

Misrepresentations and omissions are prohibited under the Rule, and for sales conducted in languages other than English, all disclosures must be provided in the language in which the sale is conducted.

The BBB urges consumers considering work-at-home or business opportunities to watch out for offers which contain these red flags:

· Big bucks for easy tasks. Watch out if you’re promised you can earn a lot of money for jobs that don’t seem to require much effort or skill. It’s likely a scam.

· ‘Instant’ job offers. If you’re offered a job without filling out an application or going through an interview, the offer is probably fraudulent. Don’t give your personal information out in these cases (especially your Social Security number!). It could lead to identity theft.

· Requests for upfront payments. If someone wants you to make an advance payment to “get in” on the ground floor of a new business opportunity - especially if it’s a big investment, or you don’t have much information about the deal - don’t do it. “Advance fee scams” are very common and come in many varieties.

· You’re asked to wire money. Wiring money via a transfer service is a convenient and perfectly legitimate option, but scam artists often ask you to wire payments (especially to destinations in other countries!) because they know you won’t be able to get your money back. Generally speaking, you should never wire money to people you don’t know.

· High pressure tactics. Don’t be in a hurry to accept an unsolicited offer of work, or to make a business investment, particularly if the other party is urging you to spend your money NOW. Take your time. If somebody tries to convince you that this is a “limited time” offer, just tell them to forget it. Ignore anybody who pushes you to sign an agreement. High pressure sales pitches are often a sign of problems.

Victims of work-at-home scams can file complaints with the BBB, but it takes only a minute to check a company’s record first at www.bbb.org . You can also contact the BBB or FTC (www.ftc.gov ) if you need help figuring out if the offer you’ve received is a scam. It could save you a fortune.

Tags: news, updates, bbb, consumer