Washington State Department of Financial Institutions

Avoiding Business Opportunity Fraud

Topics Covered:

Some Problems To Be Aware Of

Consumers have experienced a number of common problems when purchasing business opportunities.

The merchandise is of poor quality or is not what was promised. One business opportunity promised six-figure earnings in the display rack sale of discount CD ROM computer software. Buyers were told that the software would feature such brand names as IBM, Corel, and Microsoft. What was delivered was "junk software", cheap shareware, service and installation disks, and promotional samples marked "not for resale."

The merchandise or concepts did not work, or worked very poorly. One soda vending machine required exact change . . . and only in a certain combination of coins.

The products were not delivered. The seller simply took the money and vanished.

Promoters do not provide promised locations. They either do not provide any locations, or provide poor locations. Many will provide the services of professional locators but insist that the buyer pay for the services. When asked to find better locations, many will refuse, or ask the buyer to pay the locator again, or will find locations no better than before.

The promoters will not repair or replace broken machines. They refuse to honor requests for promised refunds. Many investors who get burned lose their money when promoters fail to come through with promised repairs and other ongoing assistance.

Investors find that they do not earn the promised level of income.

Your best bet is to talk with as many current owners as possible to ask them if they have any of these problems.