Federal Trade Commission Bureau of Consumer Protection Office of Consumer and Business
FTC Consumer Alert
Answering the Knock of a Business ‘Opp’
It’s not so hard to see why consumers would be drawn to ads for business opportunities that trum-
pet “be your own boss,” “set your own hours,” “work from home,” and “earn money quickly.” But
the Federal Trade Commission (FTC) says that business opportunity promotions like these often are
scams that take consumers’ money and fail to deliver on the promises.
Before investing in any “biz opp,” the FTC suggests that consumers:
Look at the ad carefully. If it claims buyers can earn a certain income, it also must give the num-
ber and percentage of previous purchasers who achieved the earnings. If an earnings claim is there
— but the additional information isn’t — the business opportunity seller is probably violating the
Get earnings claims in writing. If the business opportunity costs $500 or more, then the promoter
must back up the earnings claim in a written document. It should include the earnings claim, as
well as the number and percentage of recent clients who have earned at least as much as the pro-
moter suggested. If it’s a work-at-home or other business opportunity that involves an investment
of under $500, ask the promoter to put the earnings information in writing.
If the business opportunity is a franchise, study the disclosure document. Look for a statement
about previous purchasers. If the document says there are no previous purchasers but the seller of-
fers a list of references, be careful: the references probably are fake.
Interview each previous purchaser in person, preferably where their business operates. The FTC
requires business opportunity promoters to give potential purchasers the names, addresses and
phone numbers of at least 10 previous purchasers who live the closest to the potential purchaser.
Interviewing previous purchasers helps reduce the risk of being misled by phony references.