Here's The Truth Behind Those 'Freedom Checks' Commercials

If you've spent any time listening to conservative talk radio, you've doubtless heard the many ads for Freedom Checks. "Do you like Freedom? I do." asks the commercials spokesman. "Do you like money? I do too. That's why I love Freedom Checks!" The commercials don't really say what Freedom Checks might be other than a way to get "free" money every month. It sounds vaguely like some sort of a government program, especially with the reminder that "you need to act now!"

The program described as "Freedom Checks" isn't a government program although it's made possible thanks to a law passed during the Nixon Administration. Statute 26-F allows more than 500 American-based energy-related companies the ability to send investors quarterly or monthly tax-free payments. While they are structured in a way that most investors would recognize as a dividend, most companies prefer to describe them as a "distribution."

To qualify for this plan, companies have to be structured as master limited partnerships. They must have some sort of direct connection to the American energy business, which can range from running a refinery to drilling and operating wells to transporting oil. The companies are also required to return 90 percent of their earnings to investors. This is a similar program to the real estate investment trusts - or REITS - which also return 90 percent of their earnings tax-free to investors.

If there is a downside to these plans, it's that the average investor has to own quite a bit of a company in order to create a huge revenue stream. But the average investor can get into the mix with a small investment of as little as $50, which won't return much each month. But like all investments, the more you invest the more opportunity you have to make money.



While the underlying idea behind Freedom Checks is legitimate, this particular company pretty clearly seems to be a scam. From using customer testimonials that include clip art photos, to charging up to $129 annually for a subscription to the "Real Wealth Strategist," Freedom Checks take a real investment strategy and figures out a way to suck money out of people who are looking for information.

The bottom line is that while REITS are a potentially viable way to make money, you don't want to go to Freedom Checks for advice. There are plenty of clip art-free financial advisors who can help you take a serious look at purchasing REITS without paying for a useless package of newsletters and subscriptions.