3rd March 2018
This is going to be a strange BLOG post!
It is the first in a short ocasional series of 'Public Service' BLOGs we have decided to publish designed to save you a lot of money, heartache and disappointment.
We have been moved to write it because of the unusually large number of ridiculous and in some cases downright dangerous 'Opportunities' for you to lose money that have surfaced recently.
The trend began before Christmas last year but this week alone we have been inundated with a rash of telephone calls regarding the latest 'Get Rich Quick Schemes' from around the world.
The speed of their rise and fall is increasing and the rate people can lose their money, is similarly speeding up.
This BLOG post has been written, based on more than 30 years of legal training and practical experience, working with and advising clients throughout the UK and Europe.
Consequently, we believe its worth five minutes of your time.
As a Business Law firm, we are often asked to assess and advise clients on various prospective business opportunities they are planning to become involved with. Everything from a window cleaning round, a franchise to spend their redundancy money on or a Limited company as a vehicle for building their future.
We consider any proposal in line with relevant legislation, Government or voluntary guidelines, any regulatory bodies, the prevailing state of their specific industry and even consider the works of any relevant individuals who write or blog about the subject in question. We then prepare a considered and professional response.
Then there are the 'Amazing' ones. The 'once in a lifetime chance' the 'you'd be crazy to miss this' or a 'get in right at the start' type of conversation a client has had with someone they barely know, asking them to trust them.
NB: Although most of us can identify the sort of businesses we are talking about, they are often packaged and presented so cleverly, it is difficult to see the good ones for the bad.
These businesses are usually called by the familiar names of Network Marketing, Multi Level Marketing, Referral or Associate Marketing and several new ones relating to various Online methodologies, crowd funding and Affiliate programs.
The danger is that legitimate businesses also use these types of business format, making scams more difficult to identify.
During the last 20 or so years, the UK has led the world in a very niche area of Business Law relating to the world of Business Opportunities. In 1996 the Government passed a Law called The Trading Schemes Act. It was designed to protect the public and solve the problem of worthless scam business opportunities. However, in the years since its inception, the number of such businesses has increased dramatically.
Nevertheless, we are one of the few countries in the world that has actually produced legislation on this topic. The reason you should be pleased about this is that whenever someone approaches you with 'the latest thing', all you have to do is ask them whether it complies with the Trading Schemes Act and if it doesn't, you can simply walk away and save your money.
That being said, a simple "Yes of course it complies" will not satisfy a sensible person, so what you really need is a short set of searching questions that will quickly identify any potential problems.
The following list of questions will help you quickly subdue the ardour of most scammers:
1) Ask if the business complies with the Trading Schemes Act. If they don't know or haven't heard of it - It usually doesn't!
2) If they say it does, ask how much you have to pay to join. It is illegal to ask you to pay more than £200 in the first 7 days, so any scheme that asks for more, is already no good.
3) Ask if they are a member of a recognisable industry regulator. EG The Direct Selling Association, The British Franchise Association, The UK Crowdfunding Association, or a similar representative body in their own country of origin. If not, ask them a simple question. WHY NOT? The reason is probably because they cannot comply with the code of conduct and have therefore precluded themselves!
4) Ask about the success of the business promotor or Director or if its a new venture ask about their previous successes. In any event, at the very least search for them on Companies House. NB: if they have had dozens of recorded failures in the past, you will have to decide on the likelihood of their success this time!
5) Now, look to yourself. What training and skills do you have or can you acquire to run a business, it is hard work, requiring a myriad of skills. Anyone who tells you different, is lying. EG: How good are you at selling an idea or a product to others, can you do telesales or webinars?
Also, do you even care about the type of business you run or will you do anything, as long as there's the promise, however slight, of money in it? This is probably the single most important point, if there is no moral centre to any enterprise, it will surely fail and if you don't care how you make your money, you are contributing to the problem and are part of the reason the scams exist in the first place! Too strong? - No! just the simple unvarnished truth.
Finally, all successful business people trust their instincts, which they have honed over many years but only after they make a detailed examination of the proposition or pay for a qualified person to do so. Consider this: If you would not ask your lawyer for their analysis of the business, perhaps you already know the answer, so walk away!
So, here is a MASSIVE CHALLENGE for anyone who wants to meet it:
Until the end of March 2018 Transition Law is offering completely FREE OF CHARGE an assessment of any business opportunity you have been presented with.
We will give you an unbiased, legally justifiable opinion based on the facts as they are presented.
Starting right now, go and challenge anyone who pitches you a business idea, asks you to invest in an 'opportunity' or offers you the 'chance of a lifetime' to put themselves and their business opportunity to the test.
If they refuse, at least do yourself the favour of asking them why, if they do not believe it can stand up to professional scrutiny, then you should probably keep your hard earned money in your own pocket rather than lining theirs!
Over the next few days DO NOT be surprised if you or YOUR opportunity are challenged as a result of this blog, it is being circulated widely. If honest and decent, you should welcome the chance to demonstrate the value in your business opportunity and assist us in our quest to warn the unwary, the careless and the down right ignorant and challenge the dodgy, the coniving and the downright criminal!
Thank you for reading and please contact us with your thoughts and the various schemes you are being offered!
- The Trading Schemes Act created CRIMINAL offences - See you next time when we start naming and shaming!
