Money Making "Programs" You Should Avoid, From Scams to Merely Worthless
Bright red headlines in large fonts. Blinking text. Popups. "Sign-up here" boxes. Photos of luxury cars, yachts, beautiful women in bikinis and large mansions. If you see these on a website or an email promoting a "money making program", then it is without ANY doubt, a scam, fraud or rip-off. No legitimate marketer or company would use these tactics.
Whether it's recruiting people to sell so-called Internet-access devices, placing kiosks with Internet access in public places, or dealing in other Internet-related activities, consumers are being lured to the vast commercial potential of the Web by business promoters.
However, the United States Federal Trade Commission (FTC) says that many of these business opportunities are scams that promise more than they can possibly deliver.
The scam artists lure would-be entrepreneurs with false promises of big earnings for little effort. They pitch their fraudulent offerings on the Web; in e-mail solicitations; through infomercials on TV, classified ads and newspaper and magazine "advertorials"; and in flyers, telemarketing pitches, seminars, and direct-mail solicitations.
Here are a few examples of Internet-related business opportunities that don't live up to their promises:
Example 1: Web Cramming
The Pitch Get a free custom-designed
website for a 30-day trial period, with no obligation to
The Problem: Consumers
say they've been charged on their telephone bills or received a
separate invoice, even if they never accepted the offer or
agreed to continue the service after the trial period.
The way to protect yourself: Review your telephone bills and challenge any charges you don't recognize.
Example 2: Providing TV access to the Internet
The Pitch: The promoter promises that you can earn thousands of dollars a month by recruiting people to sell devices that provide television access to the Internet.
The Problem: The program claims to pay participants based on how many people they recruit into the program, not on their product sales. That makes the program a pyramid scheme - not a legitimate multi-level marketing plan. Pyramid schemes are illegal. Mathematically, nearly everyone who participates in them loses their money. When there are no new recruits, the pyramid collapses.
Example 3: Multilevel Marketing Plans/ Pyramids
The Pitch: Make money through the
products and services you sell as well as those sold by the
people you recruit into the program.
Problem: Consumers say that they've bought into plans and
programs, but their customers are other distributors, not the
general public. Some multi-level marketing programs are actually
illegal pyramid schemes. When products or services are sold only
to distributors like yourself, there's no way to make money.
The way to protect yourself: Avoid plans that require you to recruit distributors, buy expensive inventory or commit to a minimum sales volume.
Example 4: Business Opportunities
The Pitch: Be your own boss and earn
The Problem: Taken in
by promises about potential earnings, many consumers have
invested in a "biz op" that turned out to be a "biz flop." There
was no evidence to back up the earnings claims.
The way to protect yourself: Talk to other people who started businesses through the same company, get all the promises in writing, and study the proposed contract carefully before signing. Get an attorney or an accountant to take a look at it, too.
Example 5: Investments
The Pitch: Make an initial investment in a day trading system or service and you'll quickly realize huge returns.
The Problem: Big profits always mean big risk. Consumers have lost money to programs that claim to be able to predict the market with 100 percent accuracy.
The way to protect yourself: Check out the promoter with state and federal securities and commodities regulators, and talk to other people who invested through the program to find out what level of risk you're assuming.
Example 6: Health Care Products/Services
The Pitch: Items not sold through
traditional suppliers are "proven" to cure serious and even
fatal health problems.
Claims for "miracle" products and treatments convince consumers
that their health problems can be cured. But people with serious
illnesses who put their hopes in these offers might delay
getting the health care they need.
way to protect yourself: Consult a health care
professional before buying any "cure-all" that claims to treat a
wide range of ailments or offers quick cures and easy solutions
to serious illnesses.
Can you avoid getting caught by a scam artist working the web? Not always. But prudence pays. The FTC offers these tips to help you avoid getting caught by an offer that just may not click:
Example 7: Selling walk-up Internet access
The Pitch: The promoter claims you can earn big money by selling machines or kiosks that provide walk-up Internet access - for a fee - in places like airports, hotels and shopping malls. The machines cost thousands of dollars, but the promoter says the cost can be recovered because the machines generate "amazing" earnings. And, the company promises to help find profitable locations for the machines.
The Problem: Rather than the high-traffic locations that the promoter promises, the buyer's machines get placed where demand for Internet access is low. As a result, a would-be entrepreneur can't possibly make the promised earnings.
Example 8: Giving seminars on making money on the Internet
The Pitch: The promoter advertises that you can earn more than $150,000 as an "Internet consultant" who sponsors free seminars to teach other consumers how to make money on the Internet.
The Problem: The seminars really feature high-pressure sales pitches for the promoter's Internet yellow pages or Internet advertising. And, even though the promoter promises to provide Internet and sales training to buyers - for a fee of several thousand dollars - the buyers never get the promised training. In the end, they never earn the promised amounts.
The Federal Trade Commission offers this advice to consumers considering an Internet-related business opportunity:
- Consider the promotion carefully. If it claims buyers
can earn a certain income, then it also must give the number
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 law.
- 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 promoter 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
- Study the business opportunity's franchise disclosure
document. Under the FTC Franchise Rule, many 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
purchasers or lawsuits alleging fraud. Look for a statement
about previous purchasers. If the document says there have
been no previous purchases but the seller offers you a list
of references, be careful: the references probably are
- Interview each previous purchaser in person, preferably
where their business operates. The FTC requires most
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 them helps reduce the risk of being
misled by phony references.
- Contact the attorney general's office, state or county
consumer protection agency and Better Business Bureau both
where the business opportunity promoter is based and where
you live to find out whether there is any record of
unresolved complaints. While a complaint record may indicate
questionable business practices, a lack of complaints
doesn't necessarily mean that the promoter and the business
opportunity don't have 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 would be 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
- 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
promoter requires a deposit, ask your attorney to establish
an escrow account where the deposit can be maintained by a
third party until you make the deal.
- Take your time. Promoters of fraudulent business opportunities are likely to use high-pressure sales tactics to get you to buy in. If the business opportunity is legitimate, it'll still be around when you're ready to decide.
Reporting Possible Fraud
If you suspect a business opportunity promotion is fraudulent, report it to:
- the state attorney general's office in the state where you live and in the state where the business opportunity promoter is based.
- your county or state consumer protection agency. Check the blue pages of the phone book under county and state government.
- the Better Business Bureau in your area and the area where the promoter is based.
- the FTC. File a complaint online at www.ftc.gov or call toll free 1-877-FTC-HELP (1-877-382-4357).
- File a report at www.ConsumerFraudReporting.org to help alert other consumers to the scam.
The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.