An updated federal rule should make work-at-home business opportunity offers, or "bizopps," more transparent and less prone to fraud.
The Federal Trade Commission rule recognizes that the sour economy has spawned a growing number of small-business opportunities ? good and bad ? that target the Great Recession's economic refugees, often vulnerable unemployed, under-employed or never-employed 99 Percenters, who look to their home as a place of business.
The rule identifies illegal practices that have become all too common in the work-at-home business opportunity market, and it specifies certain disclosures that must come with business-opportunity offers.
Effective March 1, the FTC's Business Opportunity Rule covers anything from assembling crafts and making Google Adsense dollars to stuffing envelopes and writing r?sum?s.
Updating the existing bizopp rule, the changes are designed to make sure consumers have the information they need when considering buying into a work-at-home deal, as well as other self-employment gigs.
The bizopp offer must include a one-page disclosure statement with five key pieces of information. Consumers can use the document to fact-check what the seller says and what the consumer learns from his or her own research.
The document must:
? Reveal certain lawsuits or other legal actions involving the seller or its key personnel, if they exist.
? Disclose the offer's cancellation or refund policy, clearly explaining the terms.
? Disclose any claim the seller is making about earnings. If the seller makes an earnings claim, he or she must also give you an earnings claim statement.
? Provide a list of references.
The bizopp must give you the disclosure document at least seven days before you sign a contract or pay anything. The statement must be in the same language the bizopp used to pitch the deal and it should include any information about plans to give your contact information to others, including other bizopp buyers, for instance, to use you as a reference.
You should use that seven days to thoroughly check the operation and the information in the disclosure document. Do not only rely upon the bizopp's list of references. They could be stooges giving glowing-but-empty or bogus recommendations.
If the seller makes a claim about how much money you can earn, he or she must give you a separate document, emblazoned in big type across the top with the phrase "EARNINGS CLAIM STATEMENT REQUIRED BY LAW."
This earnings disclosure must include:
? The name of the person making the claim, the date.
? Specifics of the earnings claim.
? Start and end date any actual earnings were achieved.
? Number and percentage of people who achieved those earnings.
? Any information that reveals how those earnings might differ from what you could earn, say, because of your geographic location.
? A statement that says you can get written proof of the seller's earning claims if you ask for it.
Use your right to see written proof of earnings claims. Scrutinize any earnings claims. If the stated claims don't jibe with the documented statements, consider walking away. Like the disclosure document, the earnings claim statement must also be in the same language the seller used to communicate with you.
The revised rule also makes illegal:
? Bizopp statements that contradict disclosure and earnings statements.
? Claims the bizopp is a W-2 job when it is actually a 1099 business opportunity. An IRS W-2 form is used by employers to report your income when you are a full-time worker on a company's payroll. The IRS 1099 form is used to report your income when you are hired as in independent contractor.
? Misrepresentations about the nature of the investment, for example, a bizopp claiming it will help you line up locations, outlets, accounts, or customers or that you'll have an exclusive territory, if those promises are not true.
The FTC says if you suspect a bizopp scam, report it to your state attorney general's office, to your county or state consumer protection agency and to the Better Business Bureau, in all cases, both where you are based and where the bizopp promoter is based.
You can also file a federal complaint online at the FTC Complaint Assistant (https://www.ftccomplaintassistant.gov/), or call toll-free at 1-877-382-4357.
? Broderick Perkins operates a Silicon Valley-based digital news service, DeadlineNews.com. Contact him at news@deadlinenews.com.
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