Top 10 Home Based Business Scams & Tips on Avoiding Scams Home-based business and work-at-home opportunity scams rank very high on the list of the top types of Internet fraud. In this issue, we’ll focus on the Top 10 home-based business/work-at-home scams

2015

Prepared by

Dhanapal Sudhakar

2

Today’s issue is about a very important topic that : home-based business scams and work-at-home scams. However, before we get going, an important point: The FBI reports Web fraud claims rose sharply in 2002. In fact, they *tripled* from a year earlier. Home-based business and work-at-home opportunity scams rank very high on the list of the top types of Internet fraud. In this issue, we’ll focus on the Top 10 home-based business/work-at-home scams. We’ll give you the straight goods on envelope stuffing, mystery shopping, and other common home-based business “opportunities” you may have seen floating around the Net. Then in the next issue, we’ll give you some important tips you can use to kick the tires of any online job offers or business opportunities you find so you can protect yourself from those that are scams.

3

There are two basic types of scams involved here. Scammers using both types are aiming at folks who want to make money from home, either by: 1. Having you work from home, doing envelope stuffing, craft assembly, or other tasks where you are (supposedly) paid by a company as an employee. There are certainly some legitimate telecommuting jobs, but work-from-home jobs are often just big scams. Before we go any further, a sobering quote: “There are very few legitimate [work-at-home job] opportunities available,” says Beverley Williams, President and Founder of the American Association of Home-Based Businesses. 2. “Helping” you start your own home-based business, as a mystery shopper, network marketer or other businesses where the only money anyone sees is the money the scammer pockets. Certainly, there are LOTS of legitimate businesses that can help you start your own home business. We’ll help you figure out which are real — and which are just scams. Why Are These Scams So Successful? It all comes down to psychology. Besides the “make money fast” dream that many Internet newcomers fall prey to, home-based “opportunities” scammers mooch off the

4

following groups. Perhaps you belong to one or more of them:

The Sick, Disabled, or Elderly: If you are elderly, ill, or

have a disability, you may have problems landing a traditional job.

The Stay-At-Home Mother: Whether you have a spouse or you’re single, you may be looking to supplement or create an income while raising children.

The Low-Income or No-Income Family: You or your spouse may have just lost your job, and you feel desperate and anxious to find work as the bills pile up.

The Person without Higher Education: You’re not stupid or dumb — you just didn’t go on to college or university.

To summarize, these scammers are often preying primarily on the sick, the disabled, the elderly, the unemployed, parents, and people without a lot of money.

Note: These scams are not ranked by dollars lost or people scammed. In fact, there’s nothing scientific about the list. It’s just the ten home-based business scams we find the most disturbing.

5

This scam encourages you to assemble toys, dolls, or other craft projects at home with the promise of high per piece rates. All you have to do is pay a fee up-front for the starter kit… which includes instructions and parts. Sounds good? Well, once you finish assembling your first batch of crafts, you’ll be told by the company that they “don’t meet our specifications.” In fact, even if you were a robot and did it perfectly, it would be impossible for you to meet their specifications. The scammer company is making money selling the starter kits — not selling the assembled product. So, you’re left with a set of assembled crafts… and no one to sell them to.

In this scam, you pay $300-$900 for everything (supposedly) you need to start your own medical billing service at home. You’re promised state-of-the-art medical billing software, as well as a list of potential clients in your area. What you’re not told is that most medical clinics process their own bills, or outsource the processing to

6

firms, not individuals. Your software may not meet their specifications, and often the lists of “potential clients” are outdated or just plain wrong. As usual, trying to get a refund from the medical billing company is like trying to get blood from a stone.

This is a twist on the classic “envelope stuffing scam” (see #1 below). For a low price ($50?) you can become a “highly-paid” email processor working “from the comfort of your own home.” Now… what do you suppose an email processor does? If you have visions of forwarding or editing emails, forget it. What you get for your money are instructions on spamming the same ad you responded to in newsgroups and Web forums! Think about it — they offer to pay you $25 per email processed — would any legitimate company pay that?

In this one, you pay a small fee for a list of companies looking for home workers just like you. The only problem is that the list is usually a generic list of companies, companies that don’t take home workers, or companies that may have accepted home workers long, long ago. Don’t expect to get your money back with this one.

7

No need to spend too much time (or money) on this one. 1-900 numbers cost money to call, and that’s how the scammers make their profit. Save your money — don’t call a 1-900 number for more information about a supposed work-at-home job.

If you use the Internet a lot, then odds are that you’re probably a good typist. How better to capitalize on it than making money by typing at home? Here’s how it works: After sending the fee to the scammer for “more information,” you receive a disk and printed information that tells you to place home typist ads and sell copies of the disk to the suckers who reply to you. Like #8, this scam tries to turn you into a scammer!

Well, this one’s at least half-true. To be completely true, it should read: “Turn your computer into a money-making machine… for spammers!” This is much the same spam as #5, above. Once you pay your money, you’ll be sent instructions on how to place ads and pull in suckers to “turn their computers into money-making machines.”

8

If you’ve heard of network marketing (like Amway), then you know that there are legitimate MLM businesses based on agents selling products or services. One big problem with MLMs, though, is when the pyramid and the ladder-climbing become more important than selling the actual product or service. If the MLM business opportunity is all about finding new recruits rather than selling products or services, beware: The Federal Trade Commission may consider it to be a pyramid scheme… and not only can you lose all your money, but you can be charged with fraud, too! We saw an interesting MLM scam recently: one MLM company advertised the product they were selling as FREE. The fine print, however, states that it is “free in the sense that you could be earning commissions and bonuses in excess of the cost of your monthly purchase of” the product. Does that sound like free to you?

If you’ve been on the Internet for any length of time, you’ve probably received or at least seen these chain emails. They promise that all you have to do is send the email along plus some money by mail to the top names on the list, then add your name to the bottom… and one day you’ll be a millionaire. Actually, the only thing you might be one day is prosecuted for fraud. This is a classic

9

pyramid scheme, and most times the names in the chain emails are manipulated to make sure only the people at the top of the list (the true scammers) make any money. This scam should be called “Lose Money Fast” — and it’s illegal.

This is THE classic work-at-home scam. It’s been around since the U.S. Depression of the 1920s and 1930s, and it’s moved onto the Internet like a cockroach you just can’t eliminate. There are several variations, but here’s a sample: Much like #5 and #4 above, you are promised to be paid $1-2 for every envelope you stuff. All you have to do is send money and you’re guaranteed “up to 1,000 envelopes a week that you can stuff… with postage and address already affixed!” When you send your money, you get a short manual with flyer templates you’re supposed to put up around town, advertising yet another harebrained work-from-home scheme. And the pre-addressed, pre-paid envelopes? Well, when people see those flyers, all they have to do is send you $2.00 in a pre-addressed, pre-paid envelope. Then you stuff that envelope with another flyer and send it to them.

10

This is the cardinal rule. You should treat working at home just like you would treat working for an employer at their place of business. If you were going for a job interview in the ‘real world,’ how would you react if the interviewer asked you to pay $50 or $100 to land the job, for starter materials, or for a ‘good faith’ payment to make sure you were serious about the business? You’d think it was absurd. No legitimate company charges employees a fee for a job. Whenever you’re asked to pay for the chance at a job, or information about work-from-home jobs, you know it’s a scam. Home-based businesses, on the other hand, may require start-up costs to cover investments, materials, franchises, or other items. As we state in the next step, check things out before you pay anything.

11

Have you heard of the business that’s soliciting your money? If not, check them out carefully. Make sure they have a physical address and a phone number. Call to see if it’s a real phone number. Do a search on http://www.Google.com to see if you can find any positive or negative comments. Check references carefully. Some warning signs of scammer companies:

They use free Web hosting services (such as Tripod or Geocities).

They use free Web email services (such as Yahoo! Mail or Hotmail).

They use Post Office boxes for mailings and don’t disclose their real addresses.

They won’t give you a telephone number where you can contact them.

12

This sounds counter-intuitive, but if you are going to buy a starter kit or make some investment relating to a home-based business, purchase using your credit card. That way, if you don’t receive the items, or if things go wrong, you can dispute the charges with your credit card company. If you’re unsure how to do this, speak to your credit card company *before* you make the purchase.

Every scammer will promise unlimited wealth and easy work. With a little virtual footwork, you can see whether you can make money doing this kind of business or work. If you’re thinking of starting a medical billing practice, for example, call a few doctors and hospitals in your city or town and ask if there would be a market for your services. As we mentioned in the last issue, you may be surprised to discover just how limited the market really is.

Companies that don’t state their names, costs, or other important information in their ads usually have a good reason to do so — they’re scammers. As well, be wary of claims that you can make up to $1,000 a week” doing just a few hours’ worth of unskilled work. Don’t be blinded by greed.

13

If you were an honest employer (or client, if you’re looking to work from home), think about whether you would make the same kind of offer you’re being pitched. For example, you’ve read an ad where you can earn $1-2 per piece stuffing envelopes. But companies nowadays have access to sophisticated mailing equipment that can stuff thousands of envelopes an hour — why would they pay you so much more?

If you’re really interested in working for yourself, starting your own home-based business can be a great idea. It also involves a lot of work, and much of the time, some investment. This is not a decision to make lightly, nor should you start a business just because you can’t find a job. Having said that, starting your own business — if you’re willing to do your homework and do what’s necessary to make it a success — may well become one of the best decisions you ever made. There are lots of great resources on starting a legitimate home business. (But remember, you won’t receive them via spam.)

14

You may be in dire straits financially, but it’s worth your while to act calmly and professionally — just like you would in a real-world job search. Posting messages on forums saying that you are in financial trouble, or desperate to find work from home is a bad idea. Desperation is like blood to sharks — it’ll bring all of the scammers out of the woodwork, and you’ll be inundated with phony offers.

If you’re looking to start a home-based business, or looking for telecommuting work you can do at home, you may have a considerable search ahead of you. There are a *lot* of people in the same boat, many of whom are falling prey to scams every day. Don’t let scammers use high-pressure tactics to sucker you in. If you’re given a time-limited offer, there’s usually a reason why — scammers know that pressure brings in people! Even if you’re in dire straits, it pays to be patient… so that you don’t lose money to schemes that never materialize.

15

Fraudulent offers for home-based businesses or work-at-home opportunities almost always arrive as spam. The better it sounds, the less likely that it’s legitimate. Scammers aren’t planning to deliver anyway, so what does it matter to them what they promise? Delete and move on.