We’ve all seen the websites and advertisements – beautiful people standing in front of a 100-foot yacht in the Caribbean, an oversized mansion with Lamborghini parked in the circular driveway, or a private jet about to whisk them to Paris for dinner. Or piles of cash, lots and lots of cash, that could all be yours if you are let in on their secret to success. Herein lies the problem: promises of income, wealth and success can lead to big trouble for the companies that make those claims.
Earlier this summer the FTC charged 3 individuals and 9 businesses with swindling more than $125 million from thousands of consumers with a business education program called MOBE (My Online Business Education.) The claim alleges that the individuals and companies ran online advertisements, social media posts, sent direct mail pieces and held live events across the country, luring consumers into their program which would help them start their own online business and make big bucks. With a starting price of $49, consumers who signed up were quickly targeted with additional offers and upsold to higher end memberships costing thousands of dollars. Consumers who couldn’t afford the higher packages were offered financing through a company controlled by one of the defendants. The FTC contends that most people who purchased the initial memberships and higher packages never recouped their costs and now face financial hardship– some, they say, losing more than $20,000 to the scheme. The claim alleges that the advertised money-back guarantee and refund policy were often refused to be honored or came with conditions making it difficult to get your money back.
In MOBE’s case, it was a purported 21-step system for making a lot of money easily and quickly from internet marketing. The FTC’s action asserts that in reality the program amounted to nothing more than a pyramid marketing scheme designed to recruit more people to buy similar memberships, and there is no true product being sold which amounts to deceptive advertising. Deceptive Advertising is a broad term officially defined by the FTC as a representation, omission or practice that is likely to mislead the consumer and practices that have been found misleading or deceptive. Trial offers, testimonials of making money with little to no effort, limited time offers and artificial timers indicating discounted offers will soon expire (when they don’t) are often cited as examples of deceptive advertising practices.
Not everyone sells a tangible, hard good product. There are legitimate experts in various fields that want to market and sell their knowledge to others – i.e. nutritional consultants, business/professional advisors, personal/life coaches, real estate experts, web marketing/social media gurus, etc. These are all specific areas of expertise and others may be interested in learning from these professionals. In general, businesses marketing these types of non-tangible services should maintain the following best practices:
If you’re just starting to market your area of expertise or ramping up your coaching/training business, picking the right credit card processor partner is critical to the long-term success of your business. Don’t be lured in by big companies offering approval in minutes, as they are geared more toward a traditional retail business that is considered low risk. Because they approve quickly, full underwriting and review of your business practices typically happens after you start processing, and anything that looks concerning or is misunderstood could cause your funds to be held or your account closed without notice. This could be catastrophic for your business. Coaching and training programs are considered high risk by nearly every processor and bank, and FTC investigations like the one against MOBE make them even more concerned with the coaching/training industry in general. Choose to work with a processor that has experience specifically with coaching or training programs and understands the industry. Underwriting will be conducted up front and a true processing partner will advise you of any areas of concern they may see with your business or marketing activities so they can be corrected.