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Disclosure rules will help those weighing business opportunities

December 21, 2011
The Daily News

The Federal Trade Commission (FTC) has approved changes to its Business Opportunity Rule.

The changes should help ensure that consumers have the information they need when considering buying a work-at-home program or any other business opportunity.

The simplified disclosures the FTC is requiring will help prospective purchasers assess the risks of buying a business opportunity, according to the Better Business Bureau.

The final rule, which will be effective March 1, 2012, applies to business opportunities previously covered under the rule, as well as work-at-home offers such as envelope stuffing and craft assembly opportunities.

The final rule requires business opportunity sellers to give consumers specific information to help them evaluate the offer.

Sellers must disclose five key items of information in a simple, one-page document:

- The seller's identifying information.

- Whether the seller makes a claim about the purchaser's likely earnings (and, if the seller checks the "yes" box, the seller must provide information supporting any such claims).

- Whether the seller, its affiliates or key personnel have been involved in certain legal actions (and, if yes, a separate list of those actions).

- Whether the seller has a cancellation or refund policy (and, if yes, a separate document stating the material terms of such policies).

- A list of persons who bought the business opportunity within the previous three years.

Misrepresentations and omissions are prohibited. For sales conducted in languages other than English, all disclosures must be provided in the language in which the sale is conducted.

Consumers should use the disclosure document and supplementary information to fact-check sellers' sales pitches, said the FTC.

Teresa Yeast, a stay-at-home mother who purchased a craft-assembly work-at-home program from a company called Darling Angel Pin Creations, likely would have benefited from having the disclosure information at hand. The FTC filed a law enforcement action against that company in February 2010 for allegedly claiming that consumers could make hundreds of dollars assembling angel pins at home.

"It's important to be skeptical and to be cautionary when you're approached with ... a business opportunity," Yeast said. "I saw an opportunity that looked great, and took it. They took my money."

The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid these practices.

To learn more about the FTC and its services, visit www.ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261.

 
 

 

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