How to Get Rid of Your Money Problems Once and For All.
Lose your entire investment in business opportunities scams as outlined in the FTC's Project False Hopes, Bogus Business Opportunities. You won't have any money and therefore no money problems, by definition.
This type semantic trickery along with other deceitful advertising practices is the lifeblood of these scams. In this post, I want to analyze a recent vending fraud, show the correct due diligence -which is simple, but also explain who should be doing the due diligence.
Lifestyle Vending is alleged by the FTC to be a business opportunities fraud. The FTC has a civil case, and they have recommended that the Department of Justice also look into the allegations, from a criminal aspect. Here is a list of the recent criminal convictions in business opportunity frauds cases.
The FTC's complaint against Life Style Vending can be broke up into three main elements.
First, Life Style Vending is a type of business opportunity that the FTC regulates under the regulation known as the "Franchise Rule". The Franchise Rule has specific disclosures that must be made to the potential purchasers of the opportunity. Virtually, no investor thinks that they were buying a "franchise" and so it is not surprising that they or their lay advisors would not research this opportunity correctly.
Second, Life Style Vending made representations to the public about what they could expect to earn if they bought Life Style Vending's machines. For example, in a representative classified ad, the representation was that with 30 machines, one could earn potentially $50,000, yearly. No doubt Life Style Vending thought the semantic trickery of using "potential" saved them from making an outright lie. But, the Franchise Rule, or what it should be known as, the "Biz Op Rule", prevents sellers making earning claims without having a reasonable basis, which includes giving the name and number of individuals who have attained said earnings, and the percentages of distributors meeting or bettering that level of earnings.
Third, Life Style Vending did not provide purchasers with a basic disclosure document, a document which discloses much more about the opportunity, including a list of all the distributors of the vending machines.
So how could you have avoided this business opportunity scam?
Follow the four step program.
- Identify in which states Life Style Vending placed its classified ads by googling its 800 number, 1 (800) 704-5414.
- Locate all the states which require either business opportunity registration or franchise registration.
- Write and obtain the required registration from all states in 1. which appear in 2. Don't worry about where you live, just see if the required registration is there.
- If you get nothing from these state regulators, then you know that the opportunity is a business opportunity fraud. (If you do obtain the disclosure, you will have to take it to an experienced franchise attorney to evaluate it.)
Will this due diligence work? No. Not for the person hooked on the phantom dream presented by Life Style Vending. Cognitive dissonance will prevent new information from displacing the dream.
What can be done then? The four step program is for the advisors, friends, or spouses of the potential purchaser. Sometimes, these people have sufficient control over the purse strings to prevent a fraud. At the very least, they know how to evaluate a business opportunity. They do, now.
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