The Federal Trade Commission (FTC) recently obtained a temporary restraining order freezing the assets of a business opportunity scam operated under a number of different names including Lunar Capital Ventures, Ecom Genie and Profitable Automation.  The scammers contacted their victims through social media ads, websites and marketing emails through which they falsely claimed that through their program people could earn huge profits by starting online e-commerce businesses.  The truth is that the vast majority of their customers lost all of their investment of between $30,000 and $35,000.  The Federal Trade Commission sued the scammers and while the case continues the FTC got a temporary restraining order shutting them down and freezing their assets.

TIPS

The sale of business opportunities is regulated by the FTC’s Business Opportunity Rule which requires the sellers of business opportunities to provide a one-page disclosure document outlining important facts about the offering including informing you about any legal actions in which the sellers have been involved. The disclosure also has to provide you with details as to any refund policy and provide a list of references. Additionally, as is always the case with these types of scams, if they make claims about how much money you can earn through their scheme, they must provide you with an Earnings Claim Statement that indicates in detail the specifics of those claims and the opportunity to see written proof of the claims.  The defendants in this case did not provide these important disclosures.

Before considering any kind of business opportunity, you should have a lawyer review these required disclosures and if the person offering you the business opportunity does not provide these documents, you should consider that a red flag that this is a scam. You also should investigate the people behind the offering as well as the particular type of business opportunity.

You also can do a Google or other search engine search of any company from which you are considering making a purchase in which you type in the company’s name along with the words “scam” or “complaints” and see what you come up with.

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