| It has been observed that often business | | | | reports induces prospective purchasers into |
| opportunity sellers use shills to promote their | | | | believing that the opportunity is a safe and |
| products or business opportunities in advertising. | | | | lucrative investment. |
| Perhaps you seen this before when someone on | | | | To address this deceptive practice, proposed |
| TV was obviously a very skilled actor will swear | | | | section 437.5(q) contains two related prohibitions. |
| by certain product or business opportunity in an | | | | First, it would prohibit any seller from |
| infomercial. They claim that they've made all kinds | | | | misrepresenting, directly or through a third party, |
| of money in this new investment and business | | | | that any person "has purchased a business |
| opportunity, yet often this is totally fraudulent. | | | | opportunity from the seller." This would prevent a |
| You see, often the person stating what a great | | | | seller, for example, from claiming that a company |
| business it is; is only an actor they are not in the | | | | employee, locator, or other third party is a prior |
| business nor have a meeting the money doing | | | | purchaser of the opportunity, when that is not |
| anything for the business other than being an | | | | the case. Second, the provision would prohibit a |
| actor for the video. | | | | seller from misrepresenting that any person - |
| You see, the Federal Trade Commission is now | | | | such as a locator, broker, or organization that |
| onto this and they have proposed a new set of | | | | purports to be an independent trade association - |
| rules to prevent this type of fraud, as it is | | | | "can provide an independent or reliable report |
| disreputable and misleading advertising and | | | | about the business opportunity or the experiences |
| misrepresents the truth. Below is an excerpt from | | | | of any current or former purchaser." Providing a |
| the Federal Trade Commission's report on their | | | | prospect with a list of brokers who are paid to |
| new proposed set of rules for business | | | | give favorable reports, for example, would violate |
| opportunity disclosures; | | | | this provision because any statement a person on |
| Proposed section 437.5(q): Shills | | | | such a list makes would fail the "independence and |
| "Proposed section 437.5(q) would address one of | | | | reliability" test." |
| the most pernicious practices common in | | | | Now then, you can obviously see how this |
| fraudulent business opportunity sales - the use of | | | | problem can do totally out of hand and perhaps |
| shill references to lure unsuspecting consumers to | | | | you are wise enough to know a shill when you |
| invest. The Commission has brought many actions | | | | see one, however there are a lot of snakeskin oil, |
| against business opportunity sellers who provided | | | | fast talking, fraudulent business opportunity sellers |
| prospects with the names of individuals they | | | | out there in the use trying to get rid of them sold |
| falsely claimed were independent prior purchasers | | | | out the ethical practitioners of business |
| or independent third parties, but who in fact were | | | | opportunities can run their honest businesses with |
| paid by the seller to give favorable false reports | | | | out all these negative in dishonest people in the |
| confirming the seller's claims, especially their | | | | marketplace. Consider this in 2006. |
| earnings claims. The use of paid shills to give false | | | | |