6 Common Home Business Scams and How to Avoid Them

by Patricia Schaefer

Home business scams rob unsuspecting victims of millions of dollars. Con artists use deception, misrepresentation and fraud to get you to part with your hard earned money. Use these guidelines to recognize the difference between the legitimate employment opportunities and scams.

scams
Image source: BigStockPhoto.com

$2,000 Weekly mailing letters, possible from home! Postage, supplies furnished. No experience necessary. Guaranteed opportunity! Call NOW! 

Start an Internet business. Make BIG $$$$$ on the web. No experience necessary! Click here for details.

Would you respond to ads like these? Do they sound like they might offer an easy way to make the money to get out from under all those bills piling up?  Well, you’re not alone. Business opportunity scams bilk the unwary out of millions of dollars each year.  And that's just in the US.

Victims targeted include stay-at-home parents, the unemployed, elderly, disabled and people with low income. Con artists employ deception, misrepresentation and fraud; namely, an intentional perversion of truth in order to induce another to part with something of value. And that something of value my friend is your hard earned money.

Learn from the following guidelines how to differentiate between legitimate work-at-home employment opportunities and the scams – scams that waste your time and money, can ruin your reputation and might even cause you to be held personally liable for perpetrating a fraud:

If it sounds too good to be true, it probably is

There is no such thing as a free lunch and there is no such thing as a get-rich-quick home business, except maybe for the scammer. Home business opportunities that offer a lot of income in a short period of time with little work involved should be avoided like the plague.

Be very wary of companies wanting money

Asking for money up front is a classic indicator of a con. Although it isn’t uncommon to invest money in a home business, legitimate employers never charge to hire you. Most times what you really get for your money is information on how to scam others or, if the ad implies an actual job, all you get is information on how to start a business. If you do invest in a business opportunity, use your credit card instead of cash. Credit card companies offer greater ease of getting your money back if you are a victim of fraud.



Take your time researching and deciding 

Don’t be pressured to “act now.” Any business that tries to force you into making a rushed decision isn’t a business you should be working with. Take the time to find out how long the company has been in business and whether or not there have been any complaints filed against it with the Better Business Bureau. Stay away from companies that provide no telephone number or use a PO Box rather than a full street address. Obtain and call references provided by the company but realize they may be bogus. Get all the details and the refund policies in writing.

Know the most common home business scams

Envelope stuffing
Modern mailing equipment has virtually eliminated the need for homeworkers to “stuff envelopes.” Typically what you receive for your start-up money instead of envelopes and supplies are instructions to place an ad just like the one you just answered. In essence, you are required to become a con artist yourself in order to make any money. Stuffing envelopes is a scam. Period, exclamation point!

Product/craft assembly
Once you pay the up-front fee and finish assembling your first product batch, you’ll be told by the company – even if you did it perfectly – that it doesn’t meet their specifications. The company is actually making their money on selling the starter kits, not selling the assembled product, and you’re stuck with 100 toy clowns that are virtually impossible to sell.

Pyramid schemes
Don’t confuse pyramid schemes with legitimate multi-level marketing (MLM) businesses where the emphasis is on agents selling actual products or services, not just on finding new recruits. Pyramid schemes are fraudulent money-making schemes in which people are recruited to make payments to others above them in a hierarchy while expecting to receive payments from people below them. Eventually the number of new recruits fails to sustain the payment structure, and the scheme collapses with most people losing the money they paid in. Remember, if it’s all about recruiting, beware.

Medical billing
After paying hundreds of dollars for a start-up kit for your new home based medical billing service, you find your kit contains outdated or irrelevant physician contact information and useless software. Competition in the medical billing market is very strong among a number of large and well-established firms. Almost all who buy into this opportunity fail to generate enough revenues to even recover their investment.

Type-at-home
Guilty of falling for this one myself, these are usually scams. For a required fee, they promise you a listing of companies looking for home-based typists and the companies aren’t even aware they are on the list and seldom need help.

Unsolicited emails/internet schemes
With the rise of the internet and email, online home business ads are just a updated version of old scams. Simply apply the same guidelines as you would with traditional ads.

Should you or someone you know fall prey to a home business scam, there is still hope.

Contact the offending business – if possible – and ask for a refund. If they refuse, tell them you plan to notify law enforcement officials. Be sure to notify at least one of the following offices:

  • Federal Trade Commission – File a complaint through their website at www.ftc.gov, or call them toll-free at 1-877-FTC-HELP.
  • Better Business Bureau – Go to their website at www.bbb.org to file a complaint. File it with the bureau serving the area where the company is based. Don’t know? There are tools on the site to help.
  • Attorney General office of your state – Do a search on your favorite search engine for “YOUR STATE attorney general.” Once on the site, click on the prompts to file a complaint.
  • U. S. Postal Inspection Service – Locate your local postal inspector’s office at www.usps.gov. A telephone number will be provided.

Fraud is a crime. According to statistics maintained by the Federal Trade Commission, business opportunity and work-at-home fraud has increased each year for the last three years. Although your investment may be gone, you may find some solace in notifying authorities. The offending business may just end up being criminally charged and fined, and others may be saved from your fate.

Copyright 2013 Attard Communications, Inc.

About the author:
Patricia Schaefer is a staff writer for Business Know-How. She can be reached by email at pschaefer@businessknowhow.com 

 

 
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