Advice » Job Hunt Strategy» Getting Started » How to Recognize Fraudulent Bus ...
How to Recognize Fraudulent Business Opportunities

How to Recognize Fraudulent Business Opportunities

The Federal Trade Commission (FTC) says that fraudulent business opportunities consistently rank in the top 10 categories in its database of consumer fraud complaints.

"Some scam artists are really sophisticated," says Dan Salsburg, attorney for the FTC. "They know exactly how to keep consumers from guessing the true nature of their business by rounding up phony references or creating misleading documents."

Salsburg says savvy consumers can learn to spot the telltale signs of fraud. For example, many fraudulent promoters send spam email or post Internet ads involving vending machines for candy, soda, snacks or personal care items; display racks for greeting cards, CDs, perfume or similar items; or opportunities to buy into medical-billing or envelope-stuffing businesses or activities related to the Internet.

Other tip-offs include claims of high pay in weeks or months for little effort ("work only hours a week"), as well as claims about working conditions like the ability to "set your own hours," "be your own boss" or "work from home." The opportunities cost $5,000 on average, Salsburg says.

According to the FTC, many business opportunities offered through the classifieds or via spam email have little chance of success -- for example, a business with little or no demand in the market; cheap, low-quality or outdated merchandise; poor customer service; and few, if any, locations.

The FTC says consumers interested in buying a business opportunity must know their rights. "Consumers should know to look for the information," says Salsburg. "If it's not there, the opportunity isn't worth pursuing."

The Franchise Rule

The FTC Franchise Rule helps protect would-be business owners from fraudulent promoters' abuses. It requires promoters of business opportunities that sell for $500 or more to provide prospective buyers with certain information. For example, if the promoter claims -- even in an ad -- that buyers can make a certain amount of money, the promoter must include the number and percentage of previous purchasers who achieved the claim.

Promoters also must provide a franchise disclosure document that includes basic information about the promoter's company, including any lawsuits from purchasers or lawsuits alleging fraud. In addition, the promoter must give potential purchasers the names, addresses and phone numbers of at least 10 previous purchasers closest to the potential buyer.

The FTC advises you keep the following in mind when considering a business opportunity:

  • If an ad includes an earnings claim -- but not the number and percentage of people who achieved it -- the seller is probably violating the law. 
  • Search the business opportunity's franchise disclosure document for a statement about previous purchasers. If the document says there haven't been any but the seller offers a list of references, they probably are phony. 
  • Get the list of 10 previous purchasers and interview each in person, preferably where their business operates.

Even if the business opportunity sells for less than $500 and is not required to provide this information, Salsburg advises consumers to get it -- in writing. "Take your time," he advises. "Promoters of fraudulent business opportunities often use high-pressure sales tactics to get you to buy in. But if the business opportunity is legitimate, it'll be around when you're ready to decide."

Other Preventive Measures

  • If the opportunity involves selling products from a well-known company, call the company's legal department. Find out whether the promoter is affiliated with it and ask whether the company has ever threatened trademark action against this promoter or others. 
  • Consult an attorney, accountant or other business advisor before you sign any papers or pay any money. If the promoter requires a deposit, your attorney can establish an escrow account until you close the deal. 
  • 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 if there's any record of unresolved complaints. Remember that unscrupulous dealers will change names and locations to hide a history of complaints.
  • Remember that legitimate employers don’t require payment from you to secure a job -- so you should never have to pay anyone to find or obtain employment. View this FTC video on job scams to learn more and know what to avoid.

How to Report Possible Fraud

  • File a complaint online with the FTC or call toll-free (877) FTC-HELP (877-382-4357). 
  • Notify the state attorney general's office where you live and where the business-opportunity promoter is based. 
  • Call your county or state consumer protection agency, listed in the phone book's blue pages under county and state government. 
  • Alert the Better Business Bureau in your community and where the promoter is based.

For more information on how to stay safe in your job search, visit Monster's Security Center. You can also check out

Articles in This Feature:

Latest Jobs

Posted: 05/24/2015
Houston, TX, 77002
Posted: 05/24/2015
Davis, CA, 95616
City of Las Cruces
Posted: 05/24/2015
Las Cruces, NM, 88001
Posted: 05/24/2015
Houston, TX, 77041
Posted: 05/24/2015
Houston, TX, 77017

Want more personalized results?  Update Your Profile


Monster Communities

Teaching Community
Where teachers meet and learn.
Create and connect.
Networking for the career-minded woman.
Nursing Link
Where nurses call the shots.
More Monster Communities

Monster Partners

Scholarships, financial aid and more ways to pay for school.
Find top campus and online degree programs.
Military portal for the US Army, Navy, Air Force, Marine Corps and Coast Guard.
Financial Aid
Scholarships & financial aid.
Staffing for Government Jobs
Staffing and hiring solutions for federal government agency jobs.
More Monster Partners

Job Hunt Strategy

Six Ways to Make a Recruiter Hate You
If you want to blow your chances with recruiters -- and, by extension, with the companies they work for -- here are six perfect ways to do so.

Resumes & Cover Letters

Rev Up Your Resume to Relocate
Hoping to relocate? Get the ball rolling on landing the right job in the right location with these expert resume and cover letter tips.


100 Potential Interview Questions
Interview questions can run the gamut. You probably won't face all 100 of these, but you should still be prepared to answer at least some of them.

Salary & Benefits

10 Questions to Ask When Negotiating Salary
Most of us aren't natural negotiators, but asking these 10 questions during salary negotiations can help you get everything you deserve.

Employee Sourcing

Alt text
November Monster Employment Index Grows 13% Year-Over-Year, Tenth Consecutive Month of Positive Annual Growth.

For Seekers

Campus and Online Degrees
Advance your career and earn more with an online degree.
Free Salary Wizard
What are you worth? Find out and negotiate a better salary.
Research Careers
Get information on jobs and career paths to help guide your choices
Questions & Answers
Find answers to all your career related questions -- powered by Yahoo! Answers
Resume Distribution Service
Our distribution service puts your resume right in the hands of recruiters.
Resume Writing Services
Our experts will craft a keyword-rich resume that stands out in the crowd.
More Career Resources

For Employers

Career Ad Network
Target your job posting to more candidates on thousands of websites.
Hire Right Background Checks
Explore our background check packages to improve the quality of your hires.
Hiring Home Page
Find the best candidates for your business with Monster hiring solutions.
Job Postings
Find the right solution for your hiring needs. Starting at $99.
Power Resume Search
Monster's new search technology precisely matches people with your jobs.
Resource Center
Find staffing insights, labor trends, HR best practices and more.
Target Post
Connect with skilled, hourly and administrative candidates for only $99.

Social Media

Jobs on Twitter
Find jobs in your area and industry.
Monster Careers
Tune into our career advice and discussions tackling a wide range of topics and industries.
Monster Corporate & PR
Stay up-to-date on the latest news. Get the 'Who', 'What', 'When', and 'Why' on all things Monster related.
Monster Customer Service
Got a Monster question? We've got the answer. Whether you're a job seeker or employer, we can help you find the answers you need.
Monster for Employers
Find advice on hiring.
Follow Us
Check out our many pages and stay connected with the latest industry news, events, career advice and job openings.

Other Links

Monster Company Profiles
Explore companies and get information to guide your career decisions.
Compare Salaries
See how your pay stacks up to others in your field.
iPhone Application
Download the Monster app for iPhone and iPod touch.
Monster Job Seeker Blog
Monster Job Seeker Blog.
Monster Thinking Blog
Monster's Recruitment Trends Blog.
Jobs & Career Resources
Search Jobs:
For Employers: Post Jobs | Search Resumes | Advertise
About Monster | Work for Monster | Advertise with Us | AdChoices | Partner with Us | Investor Relations | Social Media
Terms of Use | Privacy Center | Accessibility Center | Help | Security | Contact Us | Sitemap | Mobile
©2015 Monster - All Rights Reserved U.S. Patents No. 5,832,497; 7,599,930 B1; 7,827,125 and 7,836,060 MWW - Looking for Monster Cable? - V: 2015.8.0.34-317