Work from the comfort of your home! Earn $1,000 a day!
Such ads are pervasive, but under new Federal Trade Commission recommendations, it may no longer be so easy to make these kinds of claims.
In a 129-page report released today, FTC staff urged that the agency's Business Opportunity Rule be expanded to cover work-at-home opportunities such as envelope stuffing, medical billing and product assembly. The FTC staff also recommended streamlining the disclosures required by the rule.
“If adopted, the changes will make it less burdensome for legitimate sellers to comply with the rule, while still protecting consumers from widespread and persistent business opportunity fraud,” according to a FTC press release.
Recommendations include requiring the disclosure of prior legal actions involving the business opportunity seller, its key employees or its affiliates in the past 10 years.
Business opportunity sellers would also have to provide written substantiation and “a reasonable basis” to back up claims about the amount of money the business could make.
Also, sellers would need to provide references — contact information for people who have purchased the business opportunity within the past three years.
An interim rule dating back to March 2007 currently governs business opportunities. Up until then, the FTC had a single rule — known as the Franchise Rule — that covered both franchises and certain business opportunities. Franchises typically are expensive, and the agreements are complex. In contrast, business opportunities often are less costly and involve simpler purchase agreements.
Public comments on the staff report will be accepted until Jan. 18, 2011.