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FTC on Business Opportunity Fraud

The FTC has produced a very good video about business opportunity fraud, the buying of a job with unrealistic earnings claims, with Jim Vitale explaining how he personally conned people.

Again, however the FTC is relying heavily upon written disclosure to defeat fraud. There is no evidence which supports this view. I have been dealing with the victims of business opportunity and franchise frauds for over 10 years, and the lack of written disclosure is not the problem. (Although, it gives the regulator a handy tool

The biggest problem is that the psychological process of wanting to believe in financial success at certain times will produce cognitive dissonance: evidence that business opportunity is fake will actually push people into making a bad investment decision quicker!

I call this phenomena: The light was red, when I drove through it.

You are not going to prevent people from making these errors, but you can reduce the pain of the error with a simple step: pay for the business opportunity with your credit card.

There are several advantages to purchasing a business opportunity with your credit card:

a. You may be able to charge back the purchase, when it is shown to be a business opportunity fraud.

b.  You are limiting your downside by your credit room.

c.  Often the biz op scammer won't be able to take a credit card, not having established the merchant's bond.

d.  There is a downside: you will be paying a heavy interest rate.

Related articles by Zemanta

• Changes at The BizOp News (bizop.ca)
• The FTC's attack on business opportunity scams (blogs.reuters.com)
• 'A Con Artist's Gold Rush' (abcnews.go.com)
• The Scholarship Scam (studentloannetwork.com)
• Stop Those Harassing Debt Collectors (abcnews.go.com)
• FTC's Top Consumer Complaints in 2008 (bizop.ca)
• Freedom Foreclosure Busted (bizop.ca)
• The Discovery of a Fraud or Scam After the Fact (bizop.ca)

Full post as published by Misleading Advertising Law on July 02, 2009 (boomark / email).