17 Feb Fraudulent “Business Opportunities” Can Push You Into Bankruptcy
I recently met with an old client who recently lost his job. Now almost 70 years old, this individual is anxiously searching for a new job, or, preferably a small business he can buy with a small inheritance he has in the bank.
He brought to our meeting some information he had obtained about a greeting card distribution business that he had found in the Sunday paper. He had called for more information and the business operations office had sent him a glossy flyer and letter that suggested income potential of $100,000 or more. The cost of the opportunity was around $18,000.
The promoter claimed to be a major distribution partner for two of the country’s largest greeting card companies. They would provide locations and circular racks – all the investor had to do was “tidy up” the cards and keep inventory current.
My client is not computer literate at all and he asked me to help him check out this business. I went to Google and typed in “XYZ Corporation and greeting cards.” I got one result on a Wiki purportedly from a lawyer who claimed that this company was a ripoff – for the $18,000, you would get some cheap wire racks and poorly printed off brand cards. Further, the company’s marketing department would send out lists of stores like Wal Mart and Target who, as you might expect, would not have much interest in doing business with someone off the street carrying around a wire rack of cards.
A further search turned up an FTC complaint against a similar company which had a very similar pitch. That litigation ended up with a disgorgement order against the greeting card promoter.
We also checked the corporate records in Wisconsin, where the promoter claimed to have been in business for 15 years. We found that this business had been administratively dissolved 12 years ago but reinstated last year.
Needless to say, enough red flags arose from this cursory investigation to lead me to strongly recommend that my client stay far away from this “opportunity.”
While I think that my old client will listen to me, I suspect that plenty of others will raid their pension plans or take advances on credit cards to fall for this type of fraudulent opportunity. More than a few of these folks have ended up in my office for bankruptcy.
When you are desperate, it is easy to fall prey to these business opportunity scams because you really want to believe that financial salvation is just around the corner. Before you spend a dime on any business, perform your due diligence. Check the Better Business Bureau where the business promoter is based. Use Google or Yahoo to run detailed searches about the business. Check the web site for the Secretary of State where the business is located. With all of the Internet resources freely available, there is no reason to become another victim of a business opportunity rip off.
Jonathan Ginsberg, Esq.
Latest posts by Jonathan Ginsberg, Esq. (see all)
- Yes You Can Refile Your Chapter 13 Case, But Should You? - September 6, 2017
- How Bankruptcy Can Solve Your “Too Expensive Car” Problem - June 6, 2017
- Why I Prefer Chapter 7 Bankruptcy to Chapter 13 Debt Consolidation - May 19, 2017
- Mistakes to Avoid: How to Recognize When and Where You are Exposed Financially - March 7, 2017
- Are You Exposed? - February 6, 2017