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Spotting Work-At-Home Scams

by NicoleD, Former Moderator

  • Created: July 1, 2009, 3:36 pm
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16 comments

Today the Federal Trade Commission (FTC) announced “a new law enforcement crackdown on scammers trying to take advantage of the economic downturn to bilk vulnerable consumers through a variety of schemes, such as promising non-existent jobs; promoting over-hyped get-rich-quick plans, bogus government grants, and phony debt-reduction services.” The sweep, called “Operation Short Change ,' includes 15 FTC cases, 44 law enforcement actions by the Department of Justice, and actions by at least 13 states and the District of Columbia.

Spotting Fraud

It’s not always easy to distinguish fraudulent business opportunities from legitimate ones, but the FTC advises that there are certain clues that can tip you off - including the type of business opportunity being advertised. Promotions for envelope stuffing, medical billing, product assembly, and some Internet-related businesses are common targets for fraud:

Medical billing/electronic claim processing ads may claim that you can earn a substantial amount while inputting data from the convenience of your home. Brochures, computer applications, and testimonials may be attempts to persuade your investment in the program. However, the FTC advises that “few consumers who purchase a medical billing business opportunity are able to find clients, start a business, and generate revenues – let alone recover their investment and earn a substantial income (FTC Facts for Consumers).”

Stuffing envelopes at home seems like easy money, but can be common ploy. After joining a program, you may come to find out that there isn’t employment available at that time. Promoters of the program might suggest that you’ll earn money if you can recruit others to respond to the ad, but your income will likely depend on whether others fall for the same trick.

Assembly/packaging scams often require investing in expensive equipment or supplies for assembling goods that companies or consumers have allegedly purchased, or intend to purchase. Even after many hours of assembly, the goods can be rejected for not passing “quality standards” and the company may refuse to pay for what they deem “defective” products.

Evaluating Work-at-Home Opportunities

The FTC recommends that legitimate business opportunity promoters should tell you in writing what’s involved in the program they are selling, and you should consult and attorney, accountant, or business advisor before putting any money down or signing a contract. If you are evaluating an opportunity, answering these questions may help you determine if it is a worthwhile venture:

  • What tasks will you have to perform? (Ask for detailed list of steps required to do the job)
  • What is the total cost of the work-at-home program, including supplies, equipment, and membership fees? What will you get for your money?
  • Will you be paid a salary or will pay be based on commission? Who will pay you and when will you receive your first paycheck?
  • For investments over $500: Does the advertisement/promotion include an earnings claims (“make up to $160,000 a year”) without providing the number and percentage of people who earned at least as much as the suggested amount? If the opportunity involves an investment of less than $500, ask for the earning details in writing.


Reporting Scams

If you’ve fallen victim to a work-at-home scam, the FTC recommends that you first contact the company and request a refund. Let the company representatives know that you plan to notify officials about your experience. If you can’t resolve the dispute with the company, file a complaint with the following resources:

  • FTC
  • Your state Attorney General’s office (or the AG office in the state where the company is located) – to determine whether you’re protected by any state law that may regulate work-at-home programs
  • Local consumer protection offices, including the Better Business Bureau
  • If applicable, your local postmaster – the U.S. Postal Service investigates fraudulent mail practices

Additionally, if you see an ad you think is deceptive, you can report it to the FTC via a complaint form at FTC.gov or call toll-free 1-877-FTC-HELP; TTY 1-866-653-4261.

Discuss Business Scams in the Community
Share the telltale signs that caused you to be suspicious of a business opportunity

Additional Resources


Message Edited by ChristineL on 12-02-2009 11:37 AM

Tags: Community Blogs, Business Law Advisor

Comments

ddrake | Performer | 8/30/2010 - 6:06 am

It's both shocking and depressing how many people I personally know who will fall for these things. And the sad thing is, they don't just fall for it once, it happens repeatedly. Not mention all the women I know who start up a Mary Kay business and then flood Facebook with nonsense about it. -----David Drake Web Designer ---This post was edited to remove a commercial link. Read our discussion policies for more Community best practices.
Professional Web Site: http://www.ExpandingDesigns.com

ddrake | Performer | 8/30/2010 - 6:06 am

It's both shocking and depressing how many people I personally know who will fall for these things. And the sad thing is, they don't just fall for it once, it happens repeatedly. Not mention all the women I know who start up a Mary Kay business and then flood Facebook with nonsense about it. -----David Drake Web Designer ---This post was edited to remove a commercial link. Read our discussion policies for more Community best practices.

PCasey | Window Shopper | 8/27/2010 - 5:38 am

I think writing scams are drastically underreported when people talk about work at home and get rich quick schemes. Every writer should become familiar with Writer Beware! as an essential resource. The two main scams for writers are vanity presses and grindhouse work. Vanity presses charge obscene amounts of money to publish a book. Grindhouse operations offer fractions of a cent per word to writers with the constant promise of higher paying jobs just around the corner. As a positive example, I offer freelance writing jobs through my business. You can see that I have a real application process and pay modest but reasonable wages. A lack of workforce quality control and below market rates with promises of higher pay to come are two of the main red flags for freelance markets. Freelance writing purchasers should also beware scams and bad deals. The web is filled with companies that have endless complaint pages about unfulfilled and substandard orders. Some of these scam companies charge outrageous rates for their work. On the other side of the equation, you have outsourcers offering to work for fractions of a penny per word. It may seem like a great deal, but the copied content and poor work quality will end up costs much more than you might save. See these Inexpensive freelance writing rates as an example within the realistic market range for good results. ---This post was edited to remove a commercial link. Read our discussion policies for more Community best practices.
Professional Web Site: http://bestwritersforhire.com

PCasey | Window Shopper | 8/27/2010 - 5:38 am

I think writing scams are drastically underreported when people talk about work at home and get rich quick schemes. Every writer should become familiar with Writer Beware! as an essential resource. The two main scams for writers are vanity presses and grindhouse work. Vanity presses charge obscene amounts of money to publish a book. Grindhouse operations offer fractions of a cent per word to writers with the constant promise of higher paying jobs just around the corner. As a positive example, I offer freelance writing jobs through my business. You can see that I have a real application process and pay modest but reasonable wages. A lack of workforce quality control and below market rates with promises of higher pay to come are two of the main red flags for freelance markets. Freelance writing purchasers should also beware scams and bad deals. The web is filled with companies that have endless complaint pages about unfulfilled and substandard orders. Some of these scam companies charge outrageous rates for their work. On the other side of the equation, you have outsourcers offering to work for fractions of a penny per word. It may seem like a great deal, but the copied content and poor work quality will end up costs much more than you might save. See these Inexpensive freelance writing rates as an example within the realistic market range for good results. ---This post was edited to remove a commercial link. Read our discussion policies for more Community best practices.

pattyherrera | Window Shopper | 8/19/2010 - 9:44 am

Thank you. This is very important information for people looking to make money from home. People are getting more and more desperate these days and the internet marketers are getting more and more convincing that you MUST have their product or invest in their business. I wish I had read this article years ago. Thank goodness now I have found a good, solid legitimate opportunity with a quality product and an affordable business model. ---This post was edited to remove a commercial link. Read our discussion policies for more Community best practices.

pattyherrera | Window Shopper | 8/19/2010 - 9:44 am

Thank you. This is very important information for people looking to make money from home. People are getting more and more desperate these days and the internet marketers are getting more and more convincing that you MUST have their product or invest in their business. I wish I had read this article years ago. Thank goodness now I have found a good, solid legitimate opportunity with a quality product and an affordable business model. ---This post was edited to remove a commercial link. Read our discussion policies for more Community best practices.

faiz123 | Window Shopper | 5/23/2010 - 10:47 am

its really good that this law has been passed. i hope that it really stops those false scams which promise wrong things and take peoples money.
Professional Web Site: http://makemoneyonlineyo.com

faiz123 | Window Shopper | 5/23/2010 - 10:47 am

its really good that this law has been passed. i hope that it really stops those false scams which promise wrong things and take peoples money.

jackiboa | Window Shopper | 3/23/2010 - 11:55 pm

That's true that an unstable situation for service people in the whole world but freelance work or work at home is the best option for those peoples who have skills to show and prove them self like if we take a example of PHP developer so they have a huge opportunity to make there designs and publish it into some freelance sites.. Regards, Jack Balboa Term Paper Message Edited by NicoleD on 12-02-2009 10:11 AM

MiaBella | Window Shopper | 3/23/2010 - 11:55 pm

This is good news. To many people get taken and fail to look at legit direct selling companies home businesses. I sure did my homework before I just joined. ~ www.MiaBellaShop.com Message Edited by ChristineL on 01-11-2010 10:30 AM