Today we all run into advertisements for business opportunities that promise quick riches and flexible and short working hours especially online. Please be advised that when the deal seems too sweet: think twice! Don’t rush into buying such an offer; it could be a scam!
To help protect you from such fraud, the California government passed a legislation in 1978 that should guide you in investing in any business opportunity within your state. According to the Seller Assisted Marketing Plan Act all (SAMPs) must be registered with the Attorney General’s office and provide significant disclosure statements to potential buyers before the signing of the contract or payment is made. Before signing the contract and making the official purchase, the contractual rights must be specified.
In general the SAMP refers to any offer that pertains to selling or leasing a product, equipment, or service that requires a payment of more than $500. This payment must be made within the first six months of signing the contract. A contract must be in place whenever a seller claims that the person, company or group of persons buying will be able to earn more than what they actually paid for the product, services or equipment. The law governing the offer of SAMPs prohibits sellers of these business opportunities from making statements about potential earnings unless they can provide data backing their claims. The act also prohibits the request for payments amounting to more than 20% of the selling price in advance.
In order to avoid frauds make sure you contact the Attorney General’s Office to verify if the SAMP opportunities really exist. As the law requires all SAMP sellers to register with the Attorney General’s office before making any advertisement within California.
Don’t be surprised to find ads for CA business opportunity scams on TV commercials, the Internet, by unsolicited mail during trade shows or at business seminars. The majority of these scams are found in small ads that appear in the classified sections of main stream newspapers. If you are considering starting a business in California you should always confirm any information about business opportunities with the government. When an advertisement for business opportunity seems to good to be true, don’t rush into it. Review the disclosure document before making any payment, get information from other consumers before you make any commitment and be careful not to buy into fake references provided in the advertisement.
If you have been approached by someone soliciting such a fraudulent business opportunity, have been the victim in the past, or just want to learn whether a business opportunity is registered in California, please feel free to contact Harshbarger Law. We are experts in business law and can help you make a decision. Click here to find out more!