- Advance Fee Loan Sharks: At some point many businesses need a loan. You may have heard about a guaranteed loan that requires an up-front fee. Don’t fall for this venture capital ploy. Advance fee operators are often located offshore and will take your money and sail away into the sunset. If your business needs a loan, check with your bank or credit union.
Business Opportunity Schemes
- Display Racks/Vending Machines: Be wary of investing in a display rack or vending machine business, such as selling computer software or prepaid phone cards, without a written list of places where your racks and vending machines will be placed. Visit the location sites and check with the business owners or mail managers to see if in fact your machines and racks can be placed there. Also, check to see if you have to pay a percentage of your sales to the site owners. If the company makes vague claims about its display racks or vending machines, don’t invest. Check references form other investors.
- Pyramid Scheme: Pyramids disguise themselves as multi-layered marketing opportunities. The appeal is almost irresistible, but pyramid schemes cost investors dearly. In the pyramid scheme, you are asked to invest money and also bring in new investors. In a multi-layered investment con, only the original investors make money. Also take note that any involvement with pyramid schemes is illegal.
- Promoting Your Business Scams: You purchased key chains, pens, ice scrapers or desk calendars with your name imprinted; the products were shoddy or never received. The travel coupons you purchased for $200 and used in a business promotion were supposed to save your customers $800 in travel costs for a trip. However, it turned out the travel agency didn’t exist. The expensive listing in a service directory sounded promising, but it was never printed. Clever ways to promote your business are useful only if they are genuine. Check references before you pay.