It started with a "personal" invitation I received in the mail encouraging me to reach for the American Dream; to get out of debt faster; to make money in my spare time; to get on the road to potential wealth, security and financial freedom. All I needed to do was attend a free, three-hour financial clinic. There was even a toll-free number to call.

Sound familiar? Of course it does. The classified section of any newspaper is filled with promises of making unlimited amounts of money at home-while putting in part-time hours. Radio stations air alluring advertisements for one-day-only seminars, and every day, thousands of "urgent" express letters are mailed, inviting recipients to achieve financial success in their spare time. But are the invitations just an entree to a massive rip-off scheme, or do they represent legitimate opportunities to make money? We wanted to find out.

The Investigation
Armed with a healthy dose of skepticism, a good sense of humor and a little cash from Entrepreneur, I set out to discover exactly what's offered at these so-called business opportunity seminars or, as the state of California calls them, assisted marketing plans.

The afternoon seminar I attended was held at a reputable local hotel, and the 15-person audience was composed primarily of people in their 50s and 60s. The speakers were articulate and the sales pitches laced with facts and figures quoted from such sources as Time magazine, research firm IDC, Egghead Software, J.C. Penney-and even President Bill Clinton.

The presenter, a professionally dressed woman who freely shared her experiences (all wonderful, of course) as an owner of all three business opportunities being offered, avoided the most typical high-pressure tactics. She did, however, create a sense of urgency by stressing that the homebased business opportunities being bundled together would only be offered at the low price of $499 at the seminar.

A second presenter offered a bonus business in addition to the other three, as well as the opportunity to obtain a merchant credit card account. At the end of the seminar, quite a few people, including me, plunked down between $499 and $649 to purchase the business oppor-tunity package of vending machines, Web sites, and personalized stationery items including business cards, sports trading cards, calendars and post cards. These investors were then invited to return the following week for a three-hour training seminar.

Training Ground

Relatively inexperienced about the inner workings of business opportunities, I thought the training seminar sounded promising and would help alleviate some of the apprehension I felt about shelling out $499 (even though it wasn't mine). Unfortunately, when I went back the next week for the training session, hotel personnel said no such meeting had ever been scheduled.

Suspecting I'd been scammed but willing to give it the benefit of the doubt, I called the company the next day and was assured there'd just been a mix-up. The representative asked if I could attend the following day's training session. When I said no, they offered to send the materials.

The next day, after some schedule finagling, I managed to attend the training session for about an hour and joined 30 to 40 people who'd apparently purchased the package. The presenter, who said he currently owned all the businesses, talked about the different things he did to become successful and presented some basic business information very quickly. While his spiel was informative, there were still elements of selling in his presentation, particularly when he talked about how many machines he had purchased to reach his goals.

As I left, I wondered why so many people would pay hard-earned money for an opportunity presented in a way that made me feel uneasy.

"Americans have deeply wired hot buttons. They dream of working for themselves, of telling their bosses to take this job and shove it, of working at home. And business opportunity sellers are ingenious in the way they hit those buttons," explains attorney Andrew A. Caffey, an expert in franchise and business opportunity law.

Caffey says people believe if they put the purchase on a credit card, it's a modest enough amount of money that if they lose it, it won't be a disaster. They also see enough people out there making these businesses work that they're willing to take the chance.

Captive Audience

Even if the investment is relatively small compared to what it costs to purchase a franchise or start a business from scratch, are these seminars really the way to go? Caffey, who has attended dozens of such meetings, says there's nothing wrong with checking out an interesting opportunity. But, he warns, leave your checkbook, credit cards and cash at home. Use the visit as a fact-finding mission only, and don't believe presenters when they tell you the offer is only good that day.

"It's very important to realize that the people sitting in the audience have enormous power," explains Caffey. "One of the [goals] of the presen-tation is to convince you that you don't, and that there's a narrow window open to grab the opportunity."

So what information should you seek and where do you get it? Caffey recommends checking out the name of the business opportunity, location of the company and the names of its principles prior to at-tending the initial meeting. However, he cautions, this information probably won't be available from the operator when you call the toll-free number to make your reservation; instead, ask to speak to one of the principles.

Because I couldn't get information when I called, I checked the Web and found basic information on the company as well as sites where people claimed this particular company had scammed them. There were also sites where distributors advertised the business and buyers said they were having good results with at least two of the three programs. I then looked at the Federal Trade Commission's (FTC's) site (http://www. ftc.gov) and found that the firm I had purchased the business opportunity from had agreed to a $500,000 consumer redress settlement.

"When we bring an action [against a company], it means we've found reason to believe what they're doing violates the law, but it isn't a conclusive finding. Most settlements aren't conclusive; however, a judgment of the court is a legal determination that they've violated the law in the manner we allege," explains Betsy Broder, a lawyer and assistant director of the Division of Marketing Practices at the FTC Bureau of Consumer Protection. Translation: If there's been a settlement, tread warily.

In addition to checking with the FTC, Broder advises finding out whether the business opportunity is registered in your state and in its home state. Twenty-five states require registration, but the financial threshold varies. In Utah, companies selling an opportunity for more than $300 must register, while in California, the threshold is $500. Even in states where the registration rule is in place, many companies-such as the one I bought from-circumvent this requirement by pricing their opportunity just under the threshold.

That's why it's best not to jump at the seminar's "one-time-only" low price, reiterates Caffey. Should you decide the purchase is worth your money, Caffey advocates calling the company after the seminar to negotiate a deal. For example, if you like only one of the businesses offered in the package, offer to purchase only that one-at a reduced price.

If you absolutely must purchase at the seminar, Caffey stresses flexing your economic power. If the requirement is payment upfront with receipt of the merchandise to follow, say you'll put down a deposit and pay the rest when the items arrive.

The key to protection is knowledge, say Broder and Caffey. Ask questions, do your due diligence, and don't believe that becoming successful is as easy as the presenters say it is.

Ask Around

Research compiled by Liza Potter, Bowen Park and Meredith Russell

In keeping with my walk-a-mile-in-your-shoes philosophy, I called my state government officials to find out which office regulates business opportunities. Unfortunately, obtaining information wasn't easy.

If you encounter the same run around, don't give up. To get more information on a business opportunity, contact the relevant office in the state where it's registered (These 25 states require business opportunity registration).

Alabama
Attorney General's Office
Consumer Affairs
(334) 242-7320

California
Department of Corporations
(415) 557-3787

Connecticut
Banking Securities & Business Department Investment Division
(860) 240-8230

Florida
Consumer Services Division
(850) 922-2770

Georgia
Consumer Affairs Office
(404) 656-3790

Illinois
Secretary of State
Corporate Information
(217) 782-7880

Indiana
Attorney General's Office
Consumer Protection Division
(317) 232-6330

Iowa
Securities Bureau
Regulated Industries Unit
(515) 281-4441

Kentucky
Attorney General's Office
Consumer Protection Division
(502) 696-5389

Louisiana
Secretary of State
Commercial Division
(225) 922-0425

Maine
Business Regulations Department
Corporations, Elections & Commissions Bureau
(207) 287-3676

Maryland
Securities Division
Franchise & Business Opportunities Unit
(410) 576-6360

Michigan
Consumer Protection Division
Antitrust & Franchise Section
(517) 373-7117

Minnesota
Commerce Department
Registration Division
(651) 296-6328

Nebraska
Banking & Finance Department
(402) 471-3445

New Hampshire
Attorney General's Office
Consumer Protection Bureau
(603) 271-3641

North Carolina
Secretary of State
Securities Division
(919) 733-3924

Ohio
Secretary of State
(614) 466-3910

Oklahoma
Securities Department
(405) 280-7700

South Carolina
Secretary of State
(803) 734-1728 or (803) 734-1951

South Dakota
Commerce & Regulation Department
Consumer Protection Division for opportunities less than $250
(605) 773-4400
Securities Division for opportunities more than $250
(605) 773-4013

Texas
Secretary of State
(512) 463-5555

Utah
Commerce Department
Consumer Protection Division
(801) 530-6601

Virginia
Clerk of the State Corporation Commission
(804) 371-9733

Washington
Financial Institutions Department
Securities Division
(360) 902-8760

Money Wise

Before you give up any of your hard-earned cash at a seminar, go through the following steps to make sure the company in question is on the up-and-up:

  • Comparison shop. Go to as many of these seminars as possible, and talk to other business opportunity companies to see exactly how much you'll get for your money. This magazine is also a good resource for information about business opportunities, and the Federal Trade Commission publishes a Consumer Guide to Buying a Franchise that may be helpful.
  • Investigate. Call the Better Business Bureau or the office in your state that's responsible for regulating assisted marketing plans or business opportunities.
  • Don't be fooled by audience enthusiasm. Sometimes companies plant shills who are the first to rush up to the table to purchase the package for sale. Don't let their "excitement" override your common sense.
  • Ask for referrals. Get a list of referrals of people in your area who are successfully operating the businesses. But again be aware that companies can also give you shills to contact who are paid to tell you they've been successful with the business. To avoid meeting with a shill, ask the company to provide as long a list as possible. Ask everyone on the list if the company provided all it promised.
  • Make a site visit. If at all possible, visit someone in your area who is successfully operating the business opportunity and examine their operations.

Get Smart

1. What business assistance is provided? For how long? How much does it cost?

2. Is the amount of money the people in your testimonials make typical of what most people earn?

3. Are you registered in any state? If not, why?

4. Have you ever sold this package for more than you're charging now?

5. Are there any fees beyond the cost of the business opportunity that I must pay to maintain the business?

6. Must I buy all of my additional supplies only from your company?

7. Do I need a business background to be successful? If not, can you give me the names of people in my area with no business background who have been successful with this opportunity?

8. Are you an officer of the company?