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Whether it's recruiting people to sell so-called Internet-access devices, placing kiosks with
Internet access in public places, or dealing in other Internet-related activities, consumers
are being lured to the vast commercial potential of the Web by business promoters.

However, the Federal Trade Commission (FTC) says that many of these business
opportunities are scams that promise more than they can possibly deliver.

The scam artists lure would-be entrepreneurs with false promises of big earnings for little
effort. They pitch their fraudulent offerings on the Web; in e-mail solicitations; through
infomercials, classified ads and newspaper and magazine "advertorials"; and in flyers,
telemarketing pitches, seminars, and direct-mail solicitations.

Here are a few examples of Internet-related business opportunities that didn't live up to
their promises:

Example 1: Providing TV access to the Internet

The Pitch: The promoter promises that you can earn thousands of dollars a month by
recruiting people to sell devices that provide television access to the Internet.

The Problem: The program claims to pay participants based on how many people they
recruit into the program, not on their product sales. That makes the program a pyramid
scheme - not a legitimate multi-level marketing plan. Pyramid schemes are illegal.
Mathematically, nearly everyone who participates in them loses their money. When there
are no new recruits, the pyramid collapses.

Example 2: Selling walk-up Internet access

The Pitch: The promoter claims you can earn big money by selling machines or kiosks
that provide walk-up Internet access - for a fee - in places like airports, hotels and
shopping malls. The machines cost thousands of dollars, but the promoter says the cost
can be recovered because the machines generate "amazing" earnings. And, the company
promises to help find profitable locations for the machines.

The Problem: Rather than the high-traffic locations that the promoter promises, the buyer's
machines get placed where demand for Internet access is low. As a result, a would-be
entrepreneur can't possibly make the promised earnings.

Example 3: Giving seminars on making money on the Internet

The Pitch: The promoter advertises that you can earn more than $150,000 as an "Internet
consultant" who sponsors free seminars to teach other consumers how to make money
on the Internet.

The Problem: The seminars really feature high-pressure sales pitches for the promoter's
Internet yellow pages or Internet advertising. And, even though the promoter promises to
provide Internet and sales training to buyers - for a fee of several thousand dollars - the
buyers never get the promised training. In the end, they never earn the promised amounts.

The FTC offers this advice to consumers considering an Internet-related business
opportunity: Consider the promotion carefully. If it claims buyers can earn a certain
income, then it also must give the number and percentage of previous purchasers who
achieved the earnings. If an earnings claim is there - but the additional information isn't -
the business opportunity seller is probably violating the law.

Get earnings claims in writing. If the business opportunity costs $500 or more, then the
promoter must back up the earnings claim in a written document. It should include the
earnings claim, as well as the number and percentage of recent clients who have earned
at least as much as the promoter suggested. If it's a work-at-home or other business
opportunity that involves an investment of under $500, ask the promoter to put the
earnings information in writing.

Study the business opportunity's franchise disclosure document. Under the FTC
Franchise Rule, many business opportunity promoters are required to provide this
document to potential purchasers. It includes information about the company, including
whether it has faced any lawsuits from purchasers or lawsuits alleging fraud. Look for a
statement about previous purchasers. If the document says there have been no previous
purchases but the seller offers you a list of references, be careful: the references probably
are phonies.

Interview each previous purchaser in person, preferably where their business operates.
The FTC requires most business opportunity promoters to give potential purchasers the
names, addresses and phone numbers of at least 10 previous purchasers who live the
closest to the potential purchaser. Interviewing them helps reduce the risk of being
misled by phony references.

Contact the attorney general's office, state or county consumer protection agency and
Better Business Bureau both where the business opportunity promoter is based and
where you live to find out whether there is any record of unresolved complaints. While a
complaint record may indicate questionable business practices, a lack of complaints
doesn't necessarily mean that the promoter and the business opportunity don't have
problems. Unscrupulous dealers often change names and locations to hide a history of

If the business opportunity involves selling products from well-known companies, call the
legal department of the company whose merchandise would be promoted. Find out
whether the business opportunity and its promoter are affiliated with the company. Ask
whether the company has ever threatened trademark action against the business
opportunity promoter.

Consult an attorney, accountant or other business advisor before you put any money
down or sign any papers. Entering into a business opportunity can be costly, so it's best
to have an expert check out the contract first. If the promoter requires a deposit, ask your
attorney to establish an escrow account where the deposit can be maintained by a third
party until you make the deal.

Take your time. Promoters of fraudulent business opportunities are likely to use
high-pressure sales tactics to get you to buy in. If the business opportunity is legitimate,
it'll still be around when you're ready to decide.