Pay phone deals have fallen from favor, but lots of other "can't miss" money-making opportunities are still out there, waiting to snag the unwary.
How about Internet kiosks, "cashless" ATMs or that old standby, vending machines? Those are just a few of the deals being sold with overblown promises of lucrative cash flow.
"We Americans want to make money fast and not work real hard for it," said Robert James, compliance officer for the Florida Department of Agriculture and Consumer Services, which regulates "business opportunities." The catchall category covers everything from work-at-home schemes to thinly disguised investments trying to skirt securities laws.
Regulation is minimal. Florida requires sellers to register and to disclose certain information, though no one checks on its accuracy. Half the states don't regulate business opportunities at all.
James said most complaints are generated by work-at-home arrangements such as envelope stuffing. The big losses, $10,000 and up, usually involve equipment. There is lots that can go wrong: The equipment may not work properly, it may never get put into service and most likely it never will generate anything like the promised revenue.
"The biggest problem with any kind of vending machine is getting good locations," James said. "People think they are getting McDonald's and they get Fred's Greasy Spoon."
James said many victims are middle-age men who have lost their jobs and borrow the money they invest, hoping to replace their lost income. Others are retirees looking for a better return on their money. By the time people complain to the state, most of their money is gone and often the promoter is too. Sometimes the Securities and Exchange Commission steps in, saying the "opportunity" is really an unregistered security.
This summer the SEC went to court to shut down Cash Link Systems of Hollywood, which had pulled in $10-million in less than a year by promising a "conservative" return of 18 percent per month on an $11,685 investment in "cashless" ATMs. The machines accept ATM and debit cards and dispense paper scrip, which is then cashed by the business where the machine is located. Cash Link investors were to share in the transaction fees, but many never got anything. A court-appointed receiver has recovered about $1-million.
You can call toll-free 1-800-435-7352 to find out if a company is registered to sell business opportunities in Florida. Just remember that registration is no guarantee of legitimacy. The due diligence will be up to you.
Q. I had hurricane damage, but not enough to reach my 2 percent hurricane deductible. Can I deduct any of these costs on my income tax?
Maybe. Will your uninsured losses exceed 10 percent of your adjusted gross income? If you think they might, order IRS Publication 2194, "Disaster Losses Kit for Individuals," which includes all the forms and publications you need. You can find IRS publications on the Internet (www.irs.gov) or order them by calling toll-free 1-800-829-3676.
If you live in an federally declared disaster area, as most of us in Florida do, you have a choice of claiming your casualty losses on your 2004 return or filing an amended 2003 return.
Note to readers:
Would you like to have someone walk you through the basics of writing a check and reading a credit report? Do you know someone who could use some basic help understanding banking, borrowing and budgeting? If so, order a free copy of the "Money Smart" financial education CD from the Federal Deposit Insurance Corp. The CD is aimed at low- and moderate-income adults, although it could be used for teenagers too. You can order a copy through the FDIC Web site (www.fdic.gov/consumers/consumer/moneysmart/order.html) where you also can work through the program online.
Helen Huntley writes about investing and markets for the Times. If you have a question about investments or personal finance, send it to On Money. We'll try to answer those we think are of greatest reader interest. All questions must be submitted in writing, but readers' names will not be published. Send questions to email@example.com or Helen Huntley, Times, P.O. Box 1121, St. Petersburg, FL 33731.