A common way for an entrepreneur to start a small business or provide an alternate source of income is to acquire or purchase a prepackaged franchise or opportunity.
Typical business opportunities involve vending machines, amusement games, pay phones or gift and novelty items sold from display racks, points out the Utah consumer protection agency.
Ideally, the vending machine, phone, display rack or other item is located in a high traffic market which helps attract customers.
The operator accepts the responsibility for the cleaning, restocking and collection of money.
The promoter is responsible for supplying machines or racks, finding locations and providing replacements.
While business opportunity scams are nothing new, the state department indicates that recent economic conditions appear to be the impetus for an increase in consumers falling victim to aggressive marketing of over promoted or relatively worthless business deals.
Studies show that business opportunity scams are most often promoted at trade shows and through small advertisements that appear in the classified sections of newspapers and magazines.
According to consumer protection officials, the majority of the ads promoting questionable business opportunities:
Promise big earnings, possibly on a part-time basis.
Contain references to vending machines, display racks or some other proven concepts.
Promise that no selling or experience is necessary.
Urge the reader to call an 800 number for more information.
There are risks inherent in any new business venture, points out the state consumer protection agency.
However, there are some things Carbon County residents should consider before entering into any business opportunity.
•Local consumers should be skeptical about earning claims.
The promise of many business opportunities is the claim of a few hours a week of work will bring earnings of $50,000, $100,000 or more a year.
The promises rarely ever come true.
•Carbon citizens should be cautious of ads that use 800 numbers.
An 800 number is often a tip-off to a scam operating out of a high-pressure telephone boiler room.
Just because an ad appears in the local news paper does not assure that the company is reliable, indicates the consumer protection office.
•Castle Valley residents should obtain and review the required disclosure documents before putting up any money.
Business opportunity promoters are required to provide a potential investor with a detailed disclosure document before consumers sign any agreement.
If the document is not available, beware, stress consumer protection officials.
When citizens obtain the disclosure documents, they should review the sections dealing with risks, the business experience of the company, any administrative, civil or legal action against the company, the fees and the conditions under which fees will be returned.
•Carbon citizens should make sure the opportunity is registered.
Check with the Utah Division of Consumer Protection to see if the opportunity is registered in the state. Be aware however, that registration is not an endorsement. Even if a business opportunity promoter does comply with the law regarding registration, this is not a guarantee that people can or will make money.
To check on registration, local residents may contact the Utah Division of Consumer Protection at (801) 530-6601.
•Carbon consumers should talk to people who have already invested money in the venture before accepting an advertised offer.
Before investing, people should always talk to others already involved with the opportunity. But even then, local residents should continue to be suspicious, advises the state consumer protection agency.
Unscrupulous promoters have been known to provide shills to talk up the virtues of the business opportunity scams.
The mandated disclosure documents require names, addresses and phone numbers of investors in a local area.
Potential business investors should use the information as a place to start to find other opportunity participants.
•Carbon County consumer should personally research an advertised business opportunity.
Local residents should make sure that they fully understand how the business opportunity will work and what the customer demand for the product or service there likely is.
Individuals considering a business venture investiment should never rely solely on a promoter’s claim that consumers are out there waiting for a company’s product or service.
Often, claims of net incomes from opportunities are either wildly inflated or are out right lies, warns the state division of consumer protection. The key is to always investigate and do either some primary research on the market or get information from a reputable source that has nothing to do with the company or person making the claims.
•Carbon County residents should never assume that the promises made by promoters about the availability prime locations, quick repairs or ongoing support are valid.
Remember, a bogus business opportunity promoter will make any claim needed to get an investor’s money, emphasizes the consumer oprotection agency.
Carbon residents should exercise extreme caution when considering whether to sign up with a company that is supposed to identify prime sites for vending machines, pay phones, display racks or other business opportunities.
Remember, business opportunities are virtually worthless when promotors fail to live up to the companies’ commitments to investors, concludes the Utah Division of Consumer Protection.
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