Recognise Business-Opportunity Fraud
“Some scam artists are really sophisticated,” says Dan Salsburg, attorney for the Federal Trade Commission (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 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.
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have little chance of success — for example, a business with little or no demand in the market; cheap, low-quality or outdated merchandise; poor customer service; and few, if any, locations.
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 territory consumer protection agency 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.
Suspicious ads can also be reported to the following authorities:
- Federal Government Website – where you can also obtain further information regarding scams.
- Australian Competition and Consumer Commission – types of scams, what to look out for and how to protect yourself.
- FIDO – ASIC’s Website listing popular scams and how to avoid them.
- Australian High Tech Crime Centre: learn more about online scams.
- Report fraudulent activities to the Australian Federal Police.
Additional Articles in This Feature
- Managing Your CareerOne Profile and Other Online Account Credentials
- Protect Your Info
- How to be a safe internet user
- Do You Suspect You’re a Victim of Identity Theft?
- Your Guide to ID Theft Awareness and Avoidance
- Recognise Business-Opportunity Fraud
- Computer Threats
- Money-Laundering and Reshipping Scams
- What You Need to Know About Cookies and Web Beacons