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The FTC recently filed a case to stop what it describes as a fast-moving scam involving a group of companies offering business opportunities and a supposed credit repair service. Although the names and details changed as the alleged scam evolved, the FTC says the defendants’ business opportunities had at least one thing in common: misleading promises that people could earn a lot of money with relatively little effort. And when it came to the credit repair scheme, the FTC says the defendants promised to provide credit repair services and 0% interest business loans in exchange for illegal upfront payments, and then failed to carry through.

According to the FTC, the defendants’ deceptive practices cost consumers approximately $50 million. To avoid further harm, the FTC asked – and a judge agreed – to stop the illegal conduct while the case is pending in federal court.

Be sure to follow the case in the Central District of California, and keep these tips in mind for your business:

The FTC’s fraud program is going strong. Companies that lie or make promises they don’t keep hurt consumers and honest competitors. The FTC monitors the marketplace, sifting through hundreds of thousands of fraud complaints each year. Evidence of a business misleading people will trigger an FTC action to get money back for consumers and prevent additional harm.

Business opportunity sellers must provide information upfront. If you offer a business opportunity, give prospective buyers the information they need to decide whether your opportunity is right for them. The Business Opportunity Rule requires the seller to provide a disclosure document before a buyer signs a contract or makes a payment, and to have written materials backing up any claims you make about earnings.

Credit repair organizations are subject to additional requirements. If you or your business sells a service to help improve people’s credit record, history, or rating, you may be a credit repair organization subject to the Credit Repair Organizations Act (CROA). Businesses and individuals subject to CROA must, among other things, tell the truth about the services they offer, give people three days to cancel contracts for services without penalty, and wait to collect payment until after the promised services are fully performed.

Insider testimonials can be deceptive. If you use testimonials given by your employees to sell your product or service, avoid violating the Reviews and Testimonials Rule by disclosing that connection. Make it clear if a testimonial is given by your own employee.

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