In these trying times of global recession and mass unemployment, an ever-increasing number of people are looking for viable ways to earn a living while working from home.
While it is entirely possible to set up a successful home business, there are many pitfalls to avoid in the process of doing so, the most dangerous of which are the pre-made home based business ‘opportunities’ and work at home scams.
It’s important to learn to spot home based business and work at home scams.
Research conducted by Staffcentrix in January 2009 indicated that when looking through a sample of 5000 work at home job leads per week, there was a 54 to 1 scam ratio.
Offers to teach people how to become a mystery shopper, home typist or envelope stuffer seem to be the most popular methods for enticing people to part with their money, though by no means are they the only types of cons to be encountered when trying to find out how to work from home.
The first thing you need to do is learn to recognize some of the common traits of a home based business scam. There are two basic types of cons which are used to prey on desperate job seekers, which are as follows:
Basic Manual Labor
Scams in this category might include craft work, copy typing, envelope stuffing and the like.
Basically, if someone is claiming you will be working as an employee based on your producing ‘X’ amount of something, but you have to pay for materials, list access, shipping or anything else, then chances are its a scam.
Of course, there are legitimate basic manual labor opportunities for people who want to work from home, such as catalog, flier or newspaper distribution (though it can be extremely difficult to make any significant money doing so).
Pre-Boxed Home Based Business
These are the kind of cons that tell you they will teach you how to start your own business as an internet marketer, SEO guru, mystery shopper and just about every other kind of business the scammer’s think they can get away with.
Once someone pays for their ‘special’ training, often all they get is some low-quality ebook filled with vague, practically useless advice, possibly with a plea for more money somewhere in the book offering further training in return.
Both types of con thrive in the modern economic climate, not because they target greedy people, but because they tend to be aimed at those who are most in need of work.
Certainly, some individuals become enticed by work at home scams because they have a “make money fast” mentality, but most people are just trying to make an honest living.
The people most vulnerable to these kinds of scams are:
- Many modern mothers will have worked at some point in their lives, even if they now stay at home looking after the kids. Combined with the recession, this has led to more stay at home moms looking for home-based work than ever before. A prime target of home-based business con men.
- In families whose combined household income is particularly low, there is often a desperate need to find ways to generate money outside of conventional means. Maybe a married couple find themselves both being laid off, but they’ve got three kids to feed. Possibly a single mother works in retail as much as she can, but can’t afford childcare and has to stay at home with her baby most of the time. Whatever the case, desperate people make mistakes, which is why they’re such a tempting target for the scammers.
Elderly, Ill and Infirm
- Older people without good pensions, as well as those who find themselves ill or disabled and unable to work for extended periods of time, are often not in a position to take on traditional forms of work. People in this group often need assistance when setting up a home-based business, which makes them easy pickings for all kinds of different cons.
- There are a large number of people out there, who never attended any form of higher learning, nor did they get the break they needed in a relevant industry to start from the ground up. Instead, they drift from menial job to menial job, always overachieving in their small roles but never breaking out of the rut they find themselves in. These are people who have money, who are willing to spend that money in order to set up their own business and live their dream, making millions by working for themselves from home, a real scammers delight.
Now I don’t want to put anyone off following through on their entrepreneurial dream.
There are certainly plenty of ways you can successfully set up a home-based business, but if you feel you can identify with any of the groups detailed above, just make sure to be extra careful when setting yourself up for success.
To help keep you on the right track, outlined below are ten of the most common home-based business and work at home scams being used around the world today:
Perhaps the most classic and well-known home-based work scam, envelope stuffing first appeared during the great U.S. Depression in the early 1930’s.
The basic premise of this scam is that people are offered the opportunity to work from home stuffing envelopes, getting paid anywhere from a few cents to a few dollars for every envelope they stuff.
The deal is that you send in some money to cover the cost of training and materials, on the premise that you will then have thousands of pre-paid envelopes to stuff each week, making the fee absolutely negligible compared to the amount of money you’ll get in return.
Once you’ve sent off your application/supply fee, you’ll receive a manual detailing how you can start your own business advertising to people to start their own business. You are then told to place posters around town, that get people to send you money along with a prepaid envelope, so that in return you can take that money, before stuffing the envelope with a flyer advertising the envelope stuffing ‘opportunity’ to the person who just wrote in.
A really vicious, self-perpetuating scam, that sadly can sometimes pay off for the people desperate enough to use it as a starting point for conning others.
This is just a modern twist on the envelope stuffing method mentioned above. Ads on message boards and online classified sites proclaim that it’s possible to work from home as an email processor, earning hundreds of dollars a day without ever having to step foot in an office again.
The scammers will ask for a processing fee ($50-$100), then tell you that what you need to do is go out and spread the scam advert all over the web, using your own email to receive leads. For every person you sign up to the scheme, you’ll then earn $20-$30.
Again it is technically possible to make some money like this, but given the unethical nature of what is a clearly a chain scamming business, you won’t ever be able to trust the people handling the majority of the money.
Typing at Home
Another twist on the envelope stuffing scam, this time offering the opportunity to become a home typist.
The premise is almost exactly the same as email processing, the only difference being that type at home scams will often go a step further, by trying to convince the victim to use web-based ad delivery services (at their own expense) in order to try and attract new victims to the scam.
A relatively new scam that’s started to see some serious growth over the last five years, is one that offers easy medical billing training and guaranteed freelance placements once the course is complete.
Targeting people with a relatively disposable income that they would be willing to invest in a legitimate business, these kinds of scammers can charge anywhere between $300 and $1000 in exchange for outdated client lists, unconventional software and unhelpful, uncertified training with no promise of refunds.
It is possible for experienced professional medical billers and coders to work from home, but normally they do so on behalf of a larger firm, one which they have worked for over the course of many years.
Novices are not going to be able to get this kind of job without extensive training (think several years) from a recognized organization.
You see these kinds of lists on sale on eBay, Craigslist and Gumtree all the time, offering people a comprehensive directory of places that provide real telecommuting opportunities, in exchange for a small research fee (normally very small like $5-$10).
Most of the time these lists are extremely generic, containing practically useless and often outdated information.
As the cost is so low, people don’t generally bother fighting with the supplier for a refund (after all they technically delivered the described product), but just save yourself the hassle and stay clear right from the start.
A lot of scammers will make money not by trying to sell people their dream, but just by getting them to try and talk about it. Using premium telephone numbers (like 1-900), these conmen are able to get unwary victims to call them in pursuit of some supposed piece of information or as part of an imaginary application process.
No legitimate company will ever force you to use premium numbers to get hold of their business team, so this really is a huge warning sign that something isn’t right.
These kinds of scams offer people the opportunity to work on assembling goods such as dolls, toys, costume jewelry, and clothing, all from the comfort of their own home, whilst being paid at a per unit price in order to do so.
Of course, people need to prove their serious applicants by paying for their initial materials and starter instructions. The trouble is when it comes to handing in the crafted goods in return for pay, people are told that the quality of work isn’t good enough and that they aren’t going to receive any money. Don’t worry though, practice makes perfect, so if want to try again another kit is available for just a few more dollars.
If you have professional training in craft work, you may be able to find a local business who doesn’t mind you working from home, but in such a case you won’t be expected to pay for your own materials.
Get Rich Quick Pyramid Schemes
It is one of the oldest kinds of cons in the modern world, the basic premise of which involves quite simply getting people to pay a certain number of other people money, so that in return, at some point in the future, new people will pay you money.
Using both traditional mail and email, these schemes usually take the form of some kind of get rich quick money making investment, offering people the opportunity to buy into some wonderful bit of financial wizardry, that promises to pay them out a hefty future return on their investment (as long as they help out by spreading word about the opportunity to everyone they can).
Anything that even looks remotely like a pyramid scheme should be avoided at all costs.
Turning Your PC Into an ATM
Another envelope scheme of sorts, this time the scammer wants you to give them permission to put some kind of software on your machine, which will then proceed to use your computer and internet access to send out spam mail twenty-four hours a day.
Most of the time you won’t get paid a cent for this, as once you’ve installed the software it can often take on a life of its own, embedding itself deep into your system, resisting all attempts to remove or stop it, possibly even sending back details about your personal information to the scammers as well.
While there are a few legitimate MLM companies out there (such as Amway), most are nothing more than complicated pyramid schemes propped up by a facade of legitimacy due to investing money into the day to day operations of their sales force.
No doubt there is money to be made from MLM, but if a company is more interested in getting you to find new recruits, instead of having you focus on the sales of its products, then their business model is clearly not sustainable.
Multi-level marketing is particularly attractive because you’re likely to find many people in your area stuck at the bottom level, making some money (but not a lot), indicating that it’s actually working when the truth is they are just setting themselves up for a financial fall in the near future.