Beware of Business Scams
How much would you pay for the opportunity to work from home and earn six figures in less than 90 days? That's exactly what the Digital Altitude company promised: They said you'd just pay for training and coaching, and then you'd be shown how to pull in the big bucks with almost no effort. Thousands of people jumped at the chance and signed up for the courses.
Unfortunately, Digital Altitude never made good on their promise. Instead, they systematically defrauded victims out of more than $14 million, providing little more than some training videos, several PDF documents and alleged coaching sessions – most of which were simply ploys to get people to fork over even more money.
According to an FTC report made public earlier this month, most people made little or no money through this job-training series. Victims were not paid until they recruited new members, and few earned enough to even cover the various fees they had to pay to take the courses – and certainly nowhere near the six-figure mark!
While the Digital Altitude scam was particularly nefarious, business-opportunity scams are nothing new. They have been part of the FTC's list of the 10 most common scams for years.
Learn to spot these scams so that you don't become the next victim.
How it works
Most business scams will reach out to their target audience through ads and videos posted on websites and social media platforms. Look out for the following:
- Outrageous claims: "You will receive a special guide that will show you how you can earn six figures online in the next 90 days." This hardly sounds plausible, but too many people get swept up in the generated hoopla and lose their senses.
- Deceptive, misleading testimonials: The marketing tactics will likely include videos of members spending their days hiking, traveling and tanning at the beach while their accounts swell with little effort on their part. Almost anyone would drool over a lifestyle like that – and that's exactly what the scammers are counting on. It's up to you to see through their bluff and recognize that it's all an elaborate sham.
- High-pressure upselling: "If you don't pay X dollars to move up to the next membership tier, you're leaving $80,000 on the table!"
- Free trial periods that aren't: Sure, the ad might boast that the first two weeks of training are free. But did you read the fine print? That's where they tell you you'll first need to pay for the next three months of membership and that, once you sign up, you'll only have two days to cancel.
Verifying a legitimate business
There's no reason to believe that every online business opportunity is bogus. Here's how to sift out the authentic organizations, and sniff out the scams:
- Ask for information: The FTC has a Franchise Rule in place to protect consumers against scams that prey on budding entrepreneurs like yourself. Anyone selling a business opportunity at the price of $500 or more must provide all prospective buyers with certain information, including the number of previous purchasers who achieved the claimed results and the names, addresses and phone numbers of the last 10 buyers. Don't settle for wishy-washy answers. Ask for the actual details before purchasing any business opportunity.
- Check the Better Business Bureau (BBB): The BBB exists for reasons like this. Visit bbb.org to verify a business's legitimacy. You'll find reviews on more than 5 million American businesses on the site.
- Verify alleged associations: The scammers might make a stab at looking authentic by claiming to be associated with a well-known company. Don't take their word at face value. Instead, call their "business partner" directly to check if their claim holds any water.
Beware of the following when investigating a business opportunity:
- An earnings claim that does not include the number and percentage of people who actually achieved this claim.
- Work hours and obligations that sound too minimal to be realistic. Remember: there is no such thing as easy money.
- A company asking for upfront payment to fund training, or for the employment opportunity. Most legitimate jobs will not ask you to pay for the opportunity to work for them.
If you've been targeted
If you think you've been victimized by a business scam, be sure to take appropriate action to help stop the scammers in their tracks.
- File a complaint with the FTC: You can file your complaint online at ftc.gov, or give the agency a call at (877) FTC-HELP (877-382-4357).
- Notify your state attorney general
- Call your county or state consumer protection agency: You can find this number listed in the phone book, under county and state government.
- Alert the Better Business Bureau: It's best to alert your local BBB branch as well as the branch in the location where your scammer is based.
By arming yourself with knowledge and doing your part to alert the authorities about these scams, you can help protect yourself and others from these money-hungry criminals.
Your Turn: Have you – or do you know someone who has – fallen for a business scam?