By Randy Hutchinson
President of the BBB of the Mid-South
Reprinted from The Commercial Appeal
Studies have found that over 40 million Americans work in some kind of gig position. They include tutors, programmers, drivers, authors, and even part-time college professors. Unfortunately, some companies take advantage of them with inflated earnings claims.
Arise Virtual Solutions claimed that it “provides an unparalleled business opportunity for tens of thousands of stay-at-home moms, veterans, college students, retirees, and other entrepreneurial-minded individuals.” People could “run your own company,” “be your own boss,” and “kiss your 9-to-5 goodbye.” They would earn up to $18/hour working as customer service agents for Fortune 500 companies.
But according to an FTC lawsuit, Arise’s internal data showed the average pay for jobs on its platform was just $12/hour; less than one percent earned $18/hour. And the company’s earnings claims didn’t factor in substantial costs consumers incurred in joining and using the platform. They had to pay hundreds of dollars to buy equipment like computers and headsets that, in some cases, was purchased from and financed by Arise. Up until July 2022, Arise charged them $250 for training programs, which less than 40 percent on average completed, and charged nearly $40 per month in mandatory fees. The company stopped charging for training programs after learning of the FTC’s investigation.
The company targeted stay-at-home mothers and others hoping to support their families while working from home. Most of the workers it recruited were Black or Latino and almost all of them were women.
In a proposed settlement, Arise will pay $7 million in refunds to customers and revise its business practices, including not making earnings claims it can’t substantiate. In announcing the settlement, FTC Chair Lina Khan said, “Operating in the ‘gig’ economy is no license for evading the law, and the FTC will continue using all of its tools to protect Americans from unlawful business practice.” The FTC thanked the BBB serving Southeast Florida and the Caribbean for its assistance in the case.
Arise ignored an FTC Notice of Penalty Offenses it received in 2022 regarding false and unsubstantiated earnings claims; more than 1,100 companies have received such notices. The FTC says other companies can learn several lessons from the Arise case, starting with the fact that its Business Opportunity Rule applies to certain gig work offers. It also reminds them that it pays close attention to questionable business practices that target communities of color and that it means business when it sends a company a Notice of Penalty Offenses.
The FTC and BBB offer this advice for people considering gig work:
- Research the company. Check them out with the BBB and search online using the company name and words like “complaint,” “review,” or “scam” to see what kinds of issues others might have had with the company.
- Talk with current and past workers about their time at the company. Learn about their experiences, income, and any out-of-pocket expenses.
- Question promises of big money or profits. Gig work opportunities often have different pay structures than traditional jobs. Make sure you understand how you’ll be paid before investing time and money in an opportunity.
- Be skeptical about testimonials and reviews. Supposed “success stories” might be fake or misleading. What do you know about the reviewers that makes them trustworthy?