Office of Securities alerts consumers to fraudulent business opportunities

Office of Securities Encourages Investing in Business Opportunities, but Alerts Consumers to Potential for Fraud in Certain Ventures 

GARDINER – Maine Securities Administrator Judith M. Shaw today announced that her agency is available to help consumers and potential entrepreneurs make sound decisions about certain kinds of business investment opportunities–especially “work at home” ventures marketed over the internet, in television infomercials or by telemarketers. Administrator Shaw also issued an alert to make Maine people aware of a rise in complaints regarding some of these out-of-state advertised business start-ups.

“The Office of Securities encourages and promotes investments in business opportunities,” Administrator Shaw commented. “As administrator of the Maine Sale of Business Opportunity law, the agency also has a responsibility to alert entrepreneurs to the potential for fraud and scams. We have seen a rise in complaints from investors who have lost money to a variety of fraudulent or aggressively marketed ‘work at home,’ ‘business coaching’ and similar schemes that guarantee a revenue stream or promise access to ‘free’ grants or business financing.”

In recent cases, investigators found that Maine residents paid hundreds or thousands of dollars to out-of-state telemarketers or promoters of goods or services to start a business, only to discover that the goods or services did not live up to the claims made. Money back guarantees were not honored, and in some cases, the company promoting the business seemed to disappear entirely.

In one complaint, an elderly consumer was sold coaching and business incorporation services that the telemarketer claimed would enable her to sell items through a website to be created. The venture did not materialize as advertized and the elderly consumer was out thousands of dollars in credit card charges.

“Many of the complaints our investigators receive come from consumers who are retired or working part time and seeking to supplement their incomes. They have been enticed by television infomercials or direct marketing solicitations that hold out the promise of large sums of money working only a few hours a week. In too many cases, however, the marketer is actually seeking is access to the consumer’s credit card or bank account,” Shaw noted.

One of the indicators that a business opportunity being offered is not an outright scam is if it is registered under Maine’s Sale of Business Opportunity law. Shaw encouraged people considering a business opportunity involving payment of $250 or more to contact the Office of Securities for assistance. Shaw advised consumers to be cautious of marketing pitches that:

 * promise that the consumer can start their own lucrative, home-based business, often utilizing a website provided by the marketer or seller, working just a few hours a week;

 * guarantee a certain level of sales or cash flow; or

 * promise money back if the buyer is not satisfied with the services or products provided, but require a significant up-front payment.

“There are certainly legitimate work-at-home businesses, and the Office of Securities is available to assist consumers and entrepreneurs make the best possible decisions to start off on the right foot. We encourage them to contact the Office before investing money, and to follow simple guidelines to protect themselves,” Shaw concluded.

 1. Make sure all of your telephone numbers, including cell phone numbers, are listed on the DO NOT CALL LIST. Sign up by calling 1-888-382-1222 or visiting http://www.donotcall.gov.

 2. Never provide your bank account or credit card information to the marketer or seller before you have thoroughly checked the business with a reliable and knowledgeable third party and received any guarantees or claims in writing.

 3. Ask if the seller is registered to market or sell the business opportunity in Maine and follow up with the Maine Office of Securities to verify that the information is correct.

To check a sale of business opportunity, an investment adviser, securities salesperson or investment, or for other information related to investing, call 1-877-624-8551 (TTY 1-888-577-6690), or visit the Office’s website (www.investors.maine.gov), or write to Maine Office of Securities, 121 SHS, Augusta, ME 04333-0121.

The Office of Securities is part of Maine’s Department of Professional and Financial Regulation, which encourages sound ethical business practices through the regulation of insurers, financial institutions, creditors, investment providers, and numerous professions and occupations for the purpose of protecting the citizens of Maine. Consumers can learn more about the Department online at http://www.maine.gov/pfr.

                      

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