FTC: Be wary of companies offering money making opportunities with exaggerated income potential

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Credit: FTC

WASHINGTON, D.C. (WWLP)– The Federal Trade Commission (FTC) is warning companies from using false or misleading earnings claims to lure people into their business ventures.

Over 1,100 multi-level marketing companies, business opportunities, franchises, investment coaching companies, and “gig” companies were sent a Notice of Penalty Offenses reminding them about the law on advertising earnings claims to potential participants, workers, and buyers.

None of the businesses receiving the notice were accused of engaging in deceptive or unfair practices, only reminded they could face penalties, up to $43,792 per violation, if they or their representatives make claims about money-making opportunities that run counter to prior FTC administrative cases. The Notice allows the FTC to seek civil penalties against a company that engages in conduct that it knows is unlawful, and that has been found unlawful in a previous FTC administrative order, other than a consent order.

Among other things, the notices tell the companies that they:

  • can’t make false, misleading or deceptive claims about the earnings you can expect
  • can’t misrepresent that you don’t need experience to earn income
  • can’t misrepresent that you must act immediately to buy or be considered for a money-making opportunity, and
  • can’t misrepresent that buying a money-making opportunity is risk-free or involves little risk.

Before you decide to participate in one of these ventures consider this:

  • Do your research. Search for information about the company online, find out how it pays its workers and any other conditions of the offer.
  • Question claims about future riches. Promises that you’ll be able to quit your job, work from home, and live lavishly often are false.
  • Steer clear of companies that use high-pressure sales tactics. Any company that says you must act immediately or discourages you from taking time to study the company is one to avoid.

For more information, check out When a Business Offer or Coaching Program Is a Scam and Multi-Level Marketing Businesses and Pyramid Schemes. If you spot an income scam, report it to the FTC at ReportFraud.ftc.gov.

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