Top 10 Work At Home and Home Based Business Scams and How to Avoid Them – Part 1
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.
Work-At-Home and Home-Based Business Scams
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.
Our goal with Internet ScamBusters is to save you time, money and heartbreak before you fall for the scams. Remember — if it sounds too good to be true… *it probably is*.
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 following groups. Perhaps you belong to one or more of them:
1. The Sick, Disabled, or Elderly: If you are elderly, ill, or have a disability, you may have problems landing a traditional job.
2. 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.
3. 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.
4. 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.
The Top 10 Home-Based Business/Work-At-Home Scams
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.
10. Craft Assembly
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.
9. Medical Billing
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 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.
8. Email Processing
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?
7. “A List of Companies Looking for Homeworkers!”
In this one, you pay a small fee for a list of companies looking for homeworkers just like you.
The only problem is that the list is usually a generic list of companies, companies that don’t take homeworkers, or companies that may have accepted homeworkers long, long ago. Don’t expect to get your money back with this one.
6. “Just Call This 1-900 Number For More Information…”
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.
5. Typing At Home
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!
4. “Turn Your Computer Into a Money-Making Machine!”
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.”
3. Multi-Level Marketing (MLM)
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?
2. Chain Letters/Emails (“Make Money Fast”)
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 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.
1. Envelope Stuffing
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.
Ingenious perhaps… but certainly illegal and unethical.
To see other articles about scams, check out the right side of this blog page for past blogs listed under “scams”.