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What is Business Opportunity Fraud?

Fraud2

Business opportunity fraud involves selling consumers false promises of jobs, government grants, or other types of money generating opportunities. Unfortunately, many innocent individuals are swept up in the federal government’s zeal to prosecute this type of fraud, so if you or a loved one are being investigated for or have been charged with business opportunity fraud, it is critical to contact an experienced white collar crime attorney who can explain your legal options.

Federal Regulation

To prevent business opportunity scams, the Federal Trade Commission (FTC), created a series of rules regarding how individuals can advertise jobs and money making opportunities. For instance, one of the FTC’s regulations requires those who wish to advertise a job or sell an investment to make specific disclosures in advance. These disclosures require sellers to take the following steps:

  • Identify themselves;
  • State whether they are making an earnings claim;
  • Disclose whether they, their affiliates, or key personnel have been involved in legal actions;
  • Disclose whether they have a cancellation or refund policy; and
  • Provide a list of purchasers who have purchased the business opportunity within the last three years.

Sellers may also be required to provide supplementarity documentation substantiating earning claims and describing the material terms of their refund policy. Finally, these disclosures must be made at least seven days before either:

  • The execution of a contract in connection with a business opportunity sale; or
  • The payment of consideration to the seller.

A failure to make these disclosures can lead to allegations of business opportunity fraud, which if substantiated could result in hefty fines and jail time.

State Law

Florida law also prohibits business opportunity fraud, which is defined by statute as the sale or lease of any products, equipment, supplies, or services which are sold to enable a purchaser to start a business. Additionally, to qualify as business opportunity fraud, the purchaser must have been required to pay an initial fee exceeding $500. Finally, the seller must assert that:

  • It will provide locations or assist the purchaser in finding a location for the operation of vending machines, display cases, card operated equipment, or currency-operated amusement machines on premises that neither party owns or leases;
  • It will purchase any products made, grown, or modified by the purchaser using supplies and services it sold to the purchaser;
  • The purchaser will derive income from the opportunity that exceeds the purchase price and that if the purchaser is dissatisfied with the results, it will refund the purchase price or repurchase the products and equipment; or
  • It will provide a sales program that will enable the purchaser to earn money from the business opportunity, unless the sale is made in conjunction with the licensing of a trademark.

Violating this law can have severe repercussions, including:

  • Fines of $5,000 per violation;
  • Restitution and damages paid to the injured parties; and
  • Court costs and attorney fees.

Contact our  Legal Team Today to Speak With an Experienced White Collar Crime Attorney

If you live in south Florida and were recently charged with business opportunity fraud, please contact Jeffrey S. Weiner, P.A., Criminal Defense Attorneys. A member of our legal team will help you schedule a free consultation with an experienced white collar crime attorney.

Resources:

leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0500-0599/0559/0559.html

ftc.gov/sites/default/files/documents/federal_register_notices/16-c.f.r.part-437-disclosure-requirements-and-prohibitions-concerning-business-opportunities-final-rule/111122bizoppfrn.pdf

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