If you’re on LinkedIn, you’ve probably gotten the question, “Do you keep your options open for extra income on the side?” (It happens on Facebook and over email as well) No doubt, this is a near perfectly crafted question. “Of course I want extra income!” I thought. I’d love to buy a new guitar, pay off some more student loans, or hit up Whistler for some bucket-list skiing.
I did a quick scroll-through on my LinkedIn inbox before writing this blog and counted 14 messages that all contain a variation of this question. Were there that many excellent business opportunities out there for making money on the side? And they all happened to use the same messaging? Of course not. It’s a question often used by newly recruited professionals in the multi-level marketing industry, selling services or products of some sort. There are legitimate companies in this world (think AdvoCare and Mary Kay), but there are also disreputable ones, only trying to make their money off of your initial investment.
You’re thinking, “I’d never fall for any of those.” You might. Under the guise of being a “Web-based Consulting startup” or “Web-based Marketing Firm,” you might be intrigued. It’s hard to differentiate what might be a legitimate business venture and who’s going to take the money and run.
I don’t blame any of these people. They’re simply trying to make some “extra income on the side” and may not be sure as to whether or not they were even duped. While the words “pyramid scheme” are sure to infuriate any of the people reaching out to you, I refused to devote too much brain space figuring out exactly what the “catch” was, which is why I was happy the Federal Trade Commission did it for me (and for you).
According to the FTC, the “Business Opportunity Rule,” enforced by the agency is here to help.
“First, it requires sellers covered by the Rule to give you a one-page disclosure document outlining important facts about the opportunity. Second, if sellers make any claims about how much money you might make, they have to give you a separate paper with more specifics. Third, the Rule makes clear that certain practices are against the law,” says the FTC.
The disclosure document is essentially an all-encompassing checklist for how legitimate the business is. It contains key information such as:
- Past legal disputes
- Refund policies
- Earnings claims
So if you’re not sure, simply ask for their disclosure document. If they come up with excuses as to why they don’t want to provide it, then you have your answer.
This is a good start for distinguishing fact from fiction, but if you want the full details on “bogus business opportunities,” click here. These pitches are getting more and more convincing, but the old and reliable “Is this too good to be true?” question is still going to be your first line of defense. Stay educated out there!