In an effort to reduce scams, the FTC is requiring companies to disclose more information about business opportunities to consumers.
It sounded like an easy way to make extra money without ever leaving the house: Pay a start-up fee of $197 and a company would help Bruce of Brooklyn Center buy electronics on eBay and resell them for a profit. He could access sales tutorials online, a 24/7 customer service line and get his own website -- all for $8,550.
Bruce, 51, declined to use his last name to protect his identity after the scam. He told Whistleblower he was drawn to the company, Fast Income Pro, last February while he was unemployed. He was searching for a job online when an ad popped up promising $15 to $84 an hour. It wasn't until three months later, he said, that he realized he could have done the work without paying thousands of dollars.
"When you're desperate, when you're really trying to get your backside out of a financial hole, you grab something you probably shouldn't," he said.
Work-at-home offers often promise a fast track to wealth by doing simple tasks like posting ads or stuffing envelopes, but experts say they're usually misleading or even illegal. That's why as of March 1, the Federal Trade Commission now requires these kinds of businesses to clearly reveal what they're offering.
The work-at-home companies now have to disclose five items in a one-page document: identifying information; whether they're making a claim about a consumer's likely earnings and information supporting the claims; whether they've been involved in legal actions and a list of them; whether they have a cancellation or refund policy and terms of those policies; and a list of people who have bought the opportunity within the past three years.
Nationally, work-from-home industry inquiries from the public ranked 11th among the calls Better Business Bureaus received in 2010, but 48th in the number of complaints, with about 3,600 received that year.
"If we could stay at home and get paid $1,000, we'd all be at home in our PJs," said Dan Hendrickson, spokesman for the Minnesota BBB.
The BBB advises consumers to beware of lucrative offers for easy tasks, "instant" job offers, requests for advance payments, offers that request a person wire money and high-pressure tactics. Often, the offers are too good to be true.
That's the lesson Bruce says he learned. He only made $20 from starting a website, and efforts to get the rest of his money back have been unsuccessful; the salesman who took down his credit card information is unreachable, he said. Fast Income Pro reimbursed him $100 from the original start-up fee. The rest of the $8,353 he doesn't expect to ever see again.
He's filed complaints with the Better Business Bureau and FTC. Fast Income Pro, also known as Amazon Services, is based in Nevada and has an F rating with the local Better Business Bureau; 12 of the 13 complaints to the BBB haven't received a response from the business. Whistleblower could not reach Fast Income Pro.
Patricia Osse, 66, of Roseau regrets signing on to sew dresses for a Connecticut company. She said she paid a start-up fee of $49.95 and the company sent her fabric to make the dresses, but when she sent the completed dresses back, the company told her they weren't up to standard and she didn't receive a dime for the work.
She asked for a refund and months later, she said the company sent her a check for $49.95. Still, she said she lost time doing the work and money mailing items.
"I was just trying to make a little extra money," she said. "It sours you. It was just a nightmare."
The business, Magical Gift Co., also known as New England Crafters, has an "A" rating with the Connecticut BBB, which lists 12 resolved complaints.
The owner, Chuck Arnone, said that it takes people two to four dresses to get approved following the company's designs, so Osse should have continued trying. He said he and his wife's Torrington, Conn.-based business of 12 years is a credible nationwide business, but often people don't understand that the work is meant to supplement a full-time job, not rake in the riches.
"We don't make any earning promises ... [but] you're not going to please everybody," he said.
He called the new FTC guidelines a "bombshell" on good work-at-home businesses like his.
Kelly Smith • 612-673-4141; Twitter: @kellystrib