By Seena Gressin, Attorney, Division of Consumer & Business Education, FTC
Companies offering work, training, business opportunities, investments, or other money-making opportunities often try to grab your attention by talking about how much money you can make. But all too often, the potential earnings they describe are exaggerated or even flat-out phony, and people who take the plunge instead lose significant time — and money.
The FTC is ramping up its efforts to stop companies from using false or misleading earnings claims to draw people into their business ventures. The agency sent notices to more than 1,100 multi-level marketing companies, business opportunities, franchises, investment coaching companies, and “gig” companies. The notices remind the businesses they must follow well-settled law when making earnings claims to potential participants, workers, and buyers.
Among other things, the notices tell the companies that they:
- can’t make false, misleading or deceptive claims about the earnings you can expect
- can’t misrepresent that you don’t need experience to earn income
- can’t misrepresent that you must act immediately to buy or be considered for a money-making opportunity, and
- can’t misrepresent that buying a money-making opportunity is risk-free or involves little risk.
The FTC’s cover letter makes clear to recipients that merely receiving a notice does not mean that a company did something wrong. But it also makes clear that the recipients are now on notice that if they use the illegal practices in the future, they can face penalties of up to $43,792 per violation.
Before acting on claims about potential earnings:
- Do your research. For example, before starting a new “gig,” search for information about the company online, like how it pays its workers and any other conditions of the offer.
- Question claims about future riches. Promises that you’ll be able to quit your job, work from home, and live lavishly often are false.
- Steer clear of companies that use high-pressure sales tactics. Any company that says you must act immediately or discourages you from taking time to study the company is one to avoid.