Avoid Work At Home Scams
Finding a way to work at home is hard enough. The process is made all the harder by scammers and deceptive marketers who take your money and your dreams.
It’s true that you need to be wary of work-at-home scams, however, with the right information, you should be able to protect yourself, and therefore shouldn’t let the fear of scams stop you from building a home based career.
This page provides you with information you need to know to protect yourself against scams including common scams to avoid, how to evaluate work-at-home opportunities and consumer protection resources. Be sure to check the Scam Alerts category for recent scam news.
Avoiding Work At Home Scams
Work-at-home opportunities are big business for scam artists. Each year over billions of dollars is lost to scams. You can protect yourself by learning how to evaluate opportunities, knowing about the most common work-at-home scams you will run into, and using consumer protection resources. This page provides general information on how to protect yourself.
Evaluating Work At Home “Opportunities”
You are reading an e-mail or magazine ad that promises to help you make good money working at home. Or your neighbor invites you to a “meeting” to learn about a new way to “leverage time and money.” They all sound so tempting and convincing. So how do you know which deals may be legit and which aren’t? Here are a few rules of thumb to consider when tempted by work-at-home schemes:
- If it sounds to good to be true, it probably is. Avoid any program that will “do the work for you” or gives grandiose income claims. There is no 3-clicks-to-riches program.
- Avoid any company that doesn’t have a street address (not P.O. Box) and phone number.
- Envelope stuffing and assembly work….stay away from them and the rest of the stuff in the list in the box to the right. I haven’t run into anyone yet who hasn’t lost money on these.
- Be careful with jobs that have a free or commercial email address. Anybody with a legitimate job to offer over the internet should have an email address with their company’s domain name… not a commercial account (unless of course it is AOL or Yahoo offering the job).However, many solo-preneurs are now hiring help and sometimes use these accounts to help them organize and screen applicants. So you don’t have to reject jobs from a Gmail or AOL account automatically, but do proceed with caution.
- The same rule applies to website URLs. Any websites listed at free hosting sites should be carefully investigated. Any company that can’t afford its own website with domain name can’t afford to hire you!
- NEVER SEND MONEY TO GET A JOB. Is isn’t uncommon to invest money in a home business, but if you are responding to a job announcement, don’t send money. Legitimate employers never charge to hire you. The non-legitimate company will tell you to send money to cover the cost of materials or to process your application. Don’t believe it. You wouldn’t pay for training or paperclips at your current job would you? These companies usually aren’t offering jobs, just information on how to scam others or how to start a business.
- Avoid the hype and look for the meat of the work. Many programs rely on copywriting to create excitement and that feeling of “This is it…the work-at-home answer I’ve been looking for!” However, you need to look behind the hype for the actual details of the program such as what does it involve? If you get to the end of an offer and don’t know what’s involved, skip it. A legitimate job will be clear about the title and duties. Legitimate business ops will be clear on the product and service, and opportunity.
- If you are looking for a home-based job from your newspaper classified ads, 800 numbers should raise a red flag. Most local companies don’t use 800 numbers in local ads. If you decide to call, and it sounds like a “job” situation, get as much information as possible so you can research the company. And remember, never send money.
- Network marketing opportunities abound. Over the past few years, MLM has begun to recover from the negative association with pyramid schemes. While the hierarchy is a pyramid in shape (come to think of it, all businesses are!), network marketing is a legitimate business opportunity IF the main purpose is to market products. You can feel safe in joining the companies that are well-known such as Mary Kay, Melaleuca, Pampered Chef, and others. Even so, it always pays to research any business opportunity. Be sure you understand the compensation plan and any refund policies. See below for information on how to investigate companies.
- Always “sleep-on-it.” Many business opportunities can get you so excited about the possibilities that you end up writing a check without thinking. Always leave your checkbook and credit cards at home! Put the magazine ad away for a day or two. Turn off the t.v. infomercial. You won’t miss out. The ads are run all the time. If you decide to pursue it, it will still be there…if its still in business.
- Watch out for Home Business Associations and Home Business Seminars in hotels. Many have been investigated by the Federal Trade Commission mostly for misrepresenting earning potentials to consumers. That’s enough to keep me away.
You have some ideas on how to weed out the scams from the legitimate work-at-home opportunities, but there is more you can do to prevent being a victim of a scam and recoup your loss if you are scammed.
First, consider the above information before doing anything. If you think you might have a viable opportunity, do the following:
- Contact the Better Business Bureau located in the area the company is located or visit the Better Business Bureau on-line. Remember though that just because a company isn’t listed doesn’t mean it’s legitimate. Also, read what the BBB says about a company. There have times that the BBB has given a bad rating to a company without ever actually getting information from or about it.
- Visit the Federal Trade Commission on-line for its consumer protection information on money-making schemes. You can also file complaints if you have been scammed.
- Contact the Attorney General’s Office in the state in which the company is located. Search Google with the state + attorney general’s office.
- Get references, lots of them, and call them all. Be aware that some references may be bogus. Some scam organizations have people giving false references.
- See what you can find on the Internet. You can do searches and participate in message boards. Read the information carefully. Some people complain about a scam when in fact they didn’t read the fine print.
- If you’re joining a work-at-home opportunity such as a direct sales company, pay with credit card. Credit card companies offer greater ease of getting your money back if you are a victim of fraud and can give you a charge-back if the company isn’t co-operating. Further, you are usually liable for only $50 when your card is lost or stolen. That kind of safety may not be offered with a debit or check guarantee card.
- Any doubts? Don’t do it!
Common Scams to Avoid
“Home Typists Needed,” You may have seen ads like this in your local paper and online. Perhaps you even responded, calling the 800 number or going to the website hoping to hear about companies hiring home workers. If you did, you probably discovered these ads were misleading. Usually you get a sales pitch to buy a book, a deceptive ploy to become an affiliate marketer, or simply asked to send money for a “kit” to get started. The first two are not necessarily illegal, but they are deceptive in that don’t actually involve a job. The third usually is illegal as you usually don’t get a kit.
Money/Payment Processing Schemes
This scam presents itself as a “job” and since it doesn’t cost any money to participate, many people have been duped into joining and then have lost thousands of dollars. The scam works like this: A company outside of the United States says it needs help processing payments from customers in the U.S. The “employee” would open a bank account into which the company would arrange for it to receive payments. The “employee” then gets a certified check made to the company for the amount deposited minus 10% (the employee’s payment). Unfortunately, a few days later, the bank calls the employee to inform him that the deposit was bogus. The “employee” (victim) is now responsible for covering the check that was sent to the company.
Note, by depositing a fake check, you could end up in jail. And ignorance ins’t a defense when it comes to illegal activity.
The best way to avoid schemes like this is to remember that companies will never ask you to use your personal account in business transactions.
Remember when a chain letter was a chain letter? It told you to send money, recipes, or whatever to the person on the top of the list and add your name to the bottom. (Then they added a bad luck curse to get you to do it!) Today chain letters have gotten a little more clever…seemingly offering something for the money you send. Nevertheless, United States Post Office clearly states that chain letters that promise monetary gain, regardless of what else it offers, are illegal!
According to the United States Postal Inspection Service, a chain letter is a “get rich quick” scheme that promises lots of money by doing what the letter says which is usually send money to the top person on the list and add yours to the bottom. You send the letter to others (or sometimes the originator of the letter will do the sending for you) and eventually, your name will move to the top of the list and tons of money will arrive. Sometimes, the letter indicates that you will receive reports for the money, and you will send those reports on as you receive money from others.
The Postal Inspection Service is clear when it says that chain letters, even those that offer some sort of “product” are illegal.
“Selling a product doesn’t ensure legality. Letters that request money or other items of value, and promise a substantial return to the participants violate Title 18, United States Code, Section 1302, the Postal Lottery Statute.”
Further, whether the letter comes snail mail, e-mail or any other route, it is still illegal because the mail is used at some point, at
least to send the money.
(Note: many programs are now using online payments such as Paypal. While the US Mail is not used, I would still avoid this type of program.) The United States Postal Inspection Service warns to not be fooled by letters saying the United States Postal services declared it legal. Neither the Postal Service or the Postal Inspectors give prior approval to any chain letter.
It also recommends that you turn any letter you receive that promises money for participation to your local postmaster or nearest Postal Inspector. Let them know you received the letter and suspect that it is illegal.
More important than legality, chain letters don’t work. Many who participate don’t send money, they just add their name. Others list numerous names and addresses, but
all money goes to the one person. A money chain letter is scam any way you look at it. Don’t be taken in.
Spoofing (using someone else’s email address), phishing (stealing access codes and passwords) and work-at-home scams are running rampant on the Internet.
The FTC’s goal is to ensure that consumers feel safe from Internet fraud. It maintains a website at www.ftc.gov and with cooperation with other agencies has created a second site at www.consumer.gov to provide information on consumer issues.
The FTC offers a great deal of information to protect consumers. Still, it is up to the consumer to protect him/herself by utilizing the information. If you have or think you have been scammed, www.ftc.gov offers information on how to report your experience not just to them but, to other consumer protection agencies as well.
E-Mail Get Rich-Schemes
Are you disappointed when you check your e-mail only to discover scrolling pages of “get rich quick” schemes? Perhaps, in your desire to work at home, you have actually read or even responded to one of these ads. I’ll admit I did.
It’s important to note the employers will never mail you about a job out of the blue. They don’t scan job boards looking for employees. They don’t have to. For ever work-at-home job they have, hundreds of not thousands will apply. So if you get a job offer out of the blue (it’s not a response to an application you made directly with the company), delete it.
With that said, you might get other money-making offers for business opportunities. The Better Business Bureau warns consumers to exercise the same cautions you would for mail and phone solicitations. It recommends the following to protect yourself:
- Get a complete list of all current and future charges and obligations you may incur.
- Ask for a description of any help, training, or financial assistance the company will provide.
- Get references; ask for the names and addresses of others who have purchased business opportunities for the company.
- Get a written description of the conditions under which the contract may be terminated or modified by either party.
- Avoid companies that don’t have a phone or street address.
Home-based Business Seminars
Have you seen the infomercial for the FREE home business seminars? Have you been tempted to go? Have you gone? According to the Federal Trade Commission, several companies that offered free seminars and charged $495 for home business “starter kits” were charged with misrepresenting earnings and success rates. The FTC stated that at the free home based business seminars, the defendants induced consumers to purchase their home based business starter kits by making claims that each of the business ventures it was selling was proven money-maker. In fact, few people who purchased these kits made substantial money. Further, the FTC reports that the claims made in testimonials do not represent expected results from using the kits.
While filing of a complaint doesn’t necessarily mean the law has been violated, the commission makes such a complaint when it has “reason to believe” that the law has been violated. This situations reminds those of us who have looked or are looking for an easy work-at-home situation to always investigate the companies and products before spending any money.
For more information regarding this or other complaints by the FTC visit their website at www.FTC.gov.
What’s the difference between a pyramid scam and network marketing? A product. Network marketing involves the distribution of a product. The product is sold by a representative and by any people the representative has sponsored and trained. Because the hierarchy of these groups looks like a pyramid, many erroneously believe they are illegal.
The true illegal pyramid scam (also known as Ponzi) involves no product or no product of value. Basically, you give $2000 to someone who then helps you recruit people to give you $2000. The truth of the scam may be hidden in words such as “investment” or “buying in at a higher level.”
What About Network Marketing?
One of the biggest concerns people have regarding network marketing is its legality. The hierarchical structure and past government investigation into Amway Corporation are the leading causes of skeptical thinking regarding network marketing. The fact is, network marketing is legal if done legally. The physical structure has nothing to do with determining the legality of network marketing.
A legitimate network company compensates based on the volume of product moved through a person’ s organization. Usually, the person must have a certain amount of product they sell themselves, but they are also paid based on the amount of product sold by others they recruit and train. Illegal pyramid schemes compensate (in theory) for recruiting others into the pyramid.
What is the difference? Legitimate network companies don’t compensate soley for the act of getting a recruit. They compensate for a percentage of how much a recruit sells. In even simpler terms, network marketing is about the distribution of products, illegal pyramid schemes are about recruiting people.
Because network marketing resembles a pyramid in its structure, many think it is illegal. The fact is most organizations, from the federal government to local non-profits, resemble a pyramid in structure. An example would be a company with a president, several vice-presidents, more supervisors, more managers and even more workers. So the physical structure is not what makes a pyramid scheme illegal.
What is illegal is getting people to pay an amount to join an organization with the promise that they’ll be compensated merely for getting others to pay to join. For example, “join for $2000, and get 5 others to join and get $10,000.” In its simplest form, it is a chain letter. More complex forms have cost people thousands of dollars in more elaborate ponzi schemes.
So, how do you know which company is ok?
- The focus of the company should be distribution of products to an end users. An end user is essentially customers and not thousands of dollars of inventory in one person’s garage.
- Commissions are paid on product distribution (sales), not for the act of recruiting. “If you are paid simply for recruiting, or for selling training, distributor kits or training materials – then you’re in a pyramid.”
- States with network marketing laws require companies to repurchase inventory returned by distributors. Sometimes there are different policies about how this is done, but the purpose is to prevent a distributor from having a garage full of products he can’t afford with little ability to sell it. You can always find someone somewhere who tried network marketing 20 years ago only to end up with a 20 year supply of soap. Legitimate network marketing companies tend to discourage buying too much inventory.
While there are many other factors to consider when choosing a network marketing company, the first should be whether or not it is legal.Hopefully, the above information will help you make that determination. As always, contact the Better Business Bureau and Federal Trade Commission, get references and research any company you are considering.
Consumer Protection Resources
If you have experienced fraud in any of the above schemes there are a few things you can do when you’re scammed. You may not get your money back, but you can fight to prevent the company from continuing to scam others.
- The State Attorney General’s office or the Secretary of State where you live and where the company is headquartered. The staff can tell you if you are protected by any state laws that regulate business opportunities.
- The Federal Trade Commission. Although the FTC cannot resolve individual disputes, the information you provide may indicate a pattern of possible law violations requiring action by the Commission. Write to Consumer Response Center, Federal Trade Commission, Washington, DC 20580, or call 202-326-2222, TDD: 202-326-2502.
- The National Fraud Information Center (NFIC) at 1-800-876-7060, 9 a.m. – 5 p.m. EST, Monday – Friday.
- Your local Better Business Bureau (BBB) and the BBB where the company is located.
- Your local Postmaster. The U.S. Postal Service investigates fraudulent mail practices. If you get a scam by mail, you can call your Postmaster General.
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