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Seven Indicted in Business Opportunity Fraud Scheme

Yesterday the Department of Justice issued a press release that several business men had been indicted related to a multi-million dollar business opportunity scam.

You can check out the press release here

According to the press release, the businessmen:

made material misrepresentations about the profits customers would make from vending machines and the locations customers would receive for vending machines. “


“As part of the purported business opportunity package, they offered to sell to customers vending machines for which pre-established, high-profit locations were already identified, and to connect customers with experienced “locators,” who would facilitate placing the vending machines in those pre-determined locations. “

They further promised to provide training and ongoing customer assistance in how to operate a successful vending machine business and assured customers that they would earn significant profits from the vending machines in a relatively short period of time”

I’m assuming the DOJ alleges these gentlemen failed to deliver on their promises, and readily pocketed millions of dollars.

What Does Michigan Do to Protect People from such Scammers?

Michigan law provides protection for consumers targeted for such “business opportunity” scams, under the Michigan Consumer Protection Act.

“The MCPA provides protection to Michigan’s consumers by prohibiting various methods, acts, and practices in trade or commerce.” Slobin v. Henry Ford Health Care, 469 Mich. 211, 215; 666 NW2d 632 (2003). MCL 445.902(g) defines “trade or commerce” as:

the conduct of a business providing goods, property, or service primarily for personal, family, or household purposes and includes the advertising, solicitation, offering for sale or rent, sale, lease, or distribution of a service or property…or a business opportunity. “Trade or commerce” does not include the purchase or sale of a franchise, but does include pyramid and chain promotions, as “franchise”, “pyramid”, and “chain promotions” are defined in the franchise investment law, 1974 PA 269, MCL 445.1501 to 445.1546.”

DiPiero v. Better Bus. Bureau of W. Michigan, Inc., No. 316308, 2014 WL 6679406, at *2 (Mich. Ct. App. Nov. 25, 2014)

Although Michigan case law has exempted most industries from the application of the MCPA, the penalties of the MCPA still apply to such business opportunity scammers.

A word to real estate professionals:

Something else to note, as is evident from my March 2nd post, for those in the real estate industry, apart from some licensed professions, particularly dealing with consumer/residential tenants, the MCPA, in general, is applicable to you. A good reason to instill best practices.

Questions? Comments?

email: Jeshua@dwlawpc.com


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