Internet Vending or Kiosks
I have written before about the FTC shutting down two Internet Vending or Kiosk business opportunities frauds, Transnet Wireless et. al. and Bikini Vending et. al.. In the Bikini Vending fraud "consumers learned about the business opportunity through telephone, mail, or in-person solicitations from local insurance agents and financial planners the defendants recruited and trained as sales agents. Using promotional materials received from the defendants, the sales agents promised consumers secured profitable locations, a guaranteed monthly income." In the Transnet Wireless case, "the defendants ran television and radio ads selling the terminals, making claims lilke "You simply receive a monthly check for all the wireless revenue generated at your location. . . There is unlimited income potential. . . Prime locations are available now". (my emphasis added)
Clearly the promoters of these business opportunties scams knew, like all realtors, that location is key. At least key in the mind of the potential distributor.
Why should ads like this raise alarm bells? What is the law's response?
First, if there really were profitable locations, then the promoter would not be selling them to you. If the promoter had this knowledge, he would keep it and make the millions that he is promising the public. You literally cannot sell location experience.
Second, since the inference above is too hard for most people, consumer protection laws have developed in an interesting manner. Business opportunities could not be sold without the false promise of "location experience". The law could have developed to challenge this misrepresentation, but instead it decided to classify these schemes as franchise like and require full disclosure of material facts. The FTC knows that these promoters will not spend the money to provide adequate disclosure which allows them to routinely shut them down. The FTC's complaints are almost boiler plate.
The good thing is that the FTC can shut down these business opportunties, but the bad thing is that very few consumers realize that a) the scheme is a franchise and b) they may have rights under their state/province franchise acts for recovery.
If consumers knew of the FTC Rule, or its equivalents, then they would simply search the FTC's database: and in this case, they could have found a very similar business opportunity fraud in 1999. The full search is here.
