Consumer Alert: Job Seekers Use Care

As part of National Consumer Protection Week, Texas Attorney General Greg Abbott is warning job-seeking Texans not to believe advertisements that promote fraudulent business opportunities. During these economic times, extra vigilance should be exercised. If you know what to look for you can spot and avoid falling for fraudulent offers.

Business opportunity scam artists lure unsuspecting Texans with empowering phrases, like “work from home,” “be your own boss” and “unlimited earning potential.” But sometimes what sounds like opportunity knocking is really just a criminal looking to take job seekers’ money.

Although these scams are hardly new, the ways in which they are marketed has changed over the years. No longer limited to classified advertisements promising good wages for stuffing envelopes from home, business-opportunity scams are now advertised via the Internet, spam e-mail and free online community bulletins. The Office of the Attorney General recommends that consumers avoid the following types of bogus schemes:

• Mystery shopper scam. Mystery or secret shopper scam victims often receive letters bearing names and logos of major retail businesses that announce an exciting outside income opportunity as a secret shopper. The “job offer” includes a cashier’s check that recipients are instructed to deposit. They are told to wire a portion of the deposited amount to a so-called training agent, whom the victim allegedly owes for training costs. The reality: The cashier’s check turns out to be counterfeit, and the victims are left unable to recover the money they sent to the promoters.

• Medical billing. For a fee, respondents are promised software, training and access to customers. The reality: Competition in the medical-billing field is fierce. Most of this business is done by established companies, not at-home individuals. Often the sellers are hoping to profit from over-priced software and expensive training that leads to few profits for the victims.

• Assembly or manufacturing. Victims purchase expensive equipment, such as sewing or sign-making machines, and materials to make products that the company has promised to buy. But when it comes time for the company to purchase the goods, they refuse citing quality standards. The reality: No goods meet their standards. The victims are left with useless, over-priced products and are left to find their own buyers.

• Vending machine business. Victims purchase expensive vending equipment and are promised high-traffic placement where the machines will generate exceptional income. The reality: The vending machines are placed in low-traffic areas and income fails to meet expectations. In many cases, the machines are never even placed at all.

• Multi-level marketing or pyramid schemes. The victim pays to invest in a business opportunity and is immediately directed to recruit others into the scheme. No real product is actively sold. The reality: If most of one’s income is derived from recruiting fees or “commissions,” then the “opportunity” is a scam that will eventually collapse when there are no new recruits, leaving many victims with unrecoverable losses.

• Businesses requiring equipment leases. As part of their new venture, victims are pressured to purchase or lease business equipment. The reality: The lease cannot be canceled and consumers will be required to continue paying on that lease even if the seller of the business opportunity goes out of business or the equipment turns out to be defective. Often, the price of the equipment is greatly inflated.

All of these have common traits. They all promise great pay with little effort and tout the benefits of working from home, setting one’s own hours and requiring no previous experience. Any of these promises should put Texans on the alert.

Other indications that an offer is bogus include the following:

• The seller makes representations like “100% Money Back Guarantee.”

• The offer is distributed as an unsolicited e-mail from an unknown person or company. Consider it highly suspect!

• The opportunity involves a very high income for little work. High-paying jobs for little effort are hard to find.

• The “business” involves the transfer of large sums of money, of which the respondent will supposedly get a percentage. These offers may involve sharing bank account or other sensitive financial information.

• The business opportunity involves the sale of products that are bogus or shoddy.

• The business pays you primarily to recruit other members.

• The seller of the business opportunity pressures you to sign an agreement immediately.

Caution should always be exercised when contemplating a business opportunity. Prospective owners should err on the side of spending time and money to check out a company. Never provide your personal or financial information until you have reviewed the company. Also, consider the following when looking at a business opportunity:

• Get earnings promises in writing.

• Study the business opportunity’s terms of agreement or disclosure statements and focus on any statements about previous purchasers.

• Interview a company’s client references in person, preferably where their business operates.

• Contact the attorney general’s office, state or county consumer protection agency and Better Business Bureau and be sure to contact officials both where the business opportunity promoter is based and where the offer was received. These agencies may have records about the business, including unresolved complaints. But remain cautious because unscrupulous dealers often change names and locations to hide their past.

• Consult an attorney, accountant or other business advisor before you put any money down or sign any papers.

• Take your time. Do not cave in to high-pressure techniques.

Consumers who believe they have been victimized by a business opportunity scam can file a complaint with the OAG at (800) 252-8011 or online at the Texas Attorney General's Web site.

Source: Office of the Texas Attorney General