Internet business scams have only continued to spread like wildfire, especially in our floundering economy. From the unemployed to the undereducated, these scams have taken full advantage of countless people. For those of you considering starting your own business online, many of these scams might sound like a perfect fit. With the still-shaky job market and even with the broad appeal of working from home, there are still way too many consumers getting scammed.
As a general rule of thumb, any offer that looks too good to be true is just that – too good to be true. It’s getting harder and harder, however, to distinguish the legitimate money making opportunities from the dubious ones. Internet business and home-based business scams are also very easy to pull off because people want to believe they can truly make money fast while working for themselves. Living the dream…at home, in your bathrobe, right?
Well, the truth is that most of these work-at-home opportunities and home-based business scams are at the top of the list of leading Internet fraud schemes.
“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.
If that’s the case, how could these internet scams possibly be so successful? How could they fool so many people? These types of scams prey on 2 of man kind’s most prominent emotional shortcomings: greed and fear. Greed, one of the cornerstones of these good-old fashioned “get-rich-quick” schemes, combined with the fear of financial insecurity, is an exceptionally powerful tonic that many fall prey to. Home-based opportunity scam artists are very skilled at using fear and greed against their victims.
The types of scams that we’ll outline below have proven to be most effective against the most vulnerable: the sick, disabled, elderly, unemployed, single parents, and low-income individuals and families. So if you’re in one of those categories, pay close attention to this article.
If, by chance, you’re thinking about starting an online business, thinking about a “Work-at-Home” opportunity or maybe just how to earn some additional income, we’ve put a list together of the most well-documented, top internet business scams. In this post, we’ll be focusing exclusively on the worst home-based business and work-at-home scams that you need to be on the lookout for.
Chain Letters or Chain Emails
If you have an email address, you’ve no doubt received at least one chain email (probably hundreds) that promises to compensate you for resending the email to a list of names and then send cash to other names on the list through the mail. The chain email will typically instruct you send the email along with some money by mail (the catch) to the very top names on the list. You simply have to add your name to the bottom of the list and pass it along. The scheme promises to make your rich while you don’t have to do much of anything. The reality is that this is a classic example of a pyramid scheme. You can, quite literally, be prosecuted for fraud for participating in one of these. These schemes are illegal and designed specifically to steal from unsuspecting individuals.
Avoid chain letter or chain email business “opportunities” like they’re the plague. (Not kidding.)
Envelope stuffing is one of the original work-at-home scams and has been around since the 1920′s. There are many permutations of this scheme but essentially the scheming company promises to pay you an amount for each envelope stuffed, typically $1-$2 per envelope. The reality is that you’ll be required to send in an upfront fee (the catch) to guarantee you access to “up to 1,000 envelopes every week” that are pre-addressed, postage-affixed, ready to be mailed. Recipients of these flyers will (hypothetically) respond by sending you their $1- $2 in a pre-addressed, pre-paid envelope. You stuff that envelope with another flyer and send it right back to them. This particular type of scam is as illegal as they come.
Envelope stuffing is a classic fraudulent scheme and it continues to thrive, particularly online. This one is both illegal and highly unethical. Run far, far away from any envelope stuffing “opportunities” that you happen upon.
Craft assembly is another hair brained get-rich-quick scheme, which entices people to assemble crafts, dolls, toys and other similar craft-type projects from the comfort of their own homes with the guarantee of generous payouts and fat profits. All you have to do is pay an upfront fee (the catch) for the “starter kit”… which includes the parts and directions for assembly. Typically what happens in this scam is that once you’ve completed your first assembly and mailed it in, you’ll be told by these con artists that it has “failed to meet our required specifications.”
The scam is designed so that literally no one can meet the required specifications. The terms and conditions of their agreements give them the ability to deny receipt of these assembled products solely at their own discretion. The company makes their money selling the starter kits. With no one to sell these crafts with “failed specifications”, the assembled “crafts” end up in your own attic or garbage can.
Craft assembly is an ugly scheme that’s also been around for quite awhile. It’s illegal, totally unethical and should NEVER be considered a legitimate home-based business opportunity.
Email Processing Tech
The email processing tech scam puts a different spin on the classic envelope stuffing scam. Again, you have to pay a fee upfront (the catch) to get access to this “lucrative” program, allowing you to process email from your own home and make tons of money simply by processing email. It sounds too good to be true, right? Well, it is. The reality is that “processing” email amounts to nothing more than spamming the same advertisement that you received to hundreds or thousands of others. Your “processing” job amounts to trolling the Web and placing these ads inextricably in various newsgroups and forums, which is typically a direct violation of newsgroup and forum guidelines.
The email processing scam might seem harmless, but just think about all the other innocent spammers that you’ll be recruiting. To make matters worse, many of these scam artists end up failing to pay you for your “processed” emails anyway. This one is the very definition of a lose, lose situation.
Another popular internet scam centers around a home-based medical billing “opportunity” that requires you to pay upfront fees (the catch) for all the supplies you’ll need to start your very own medical billing practice. The “start-up” fees are usually in the neighborhood of around $200-$1000. Most companies promise you’ll be getting “top of the line” software along with a list of prospective clients you can call in your local area (can you say dead leads?) Most medical providers have their own people or have outsourced their medical bill processing, so your “top of the line” software will typically not be up to snuff with their own specifications and your cold-calling will likely leave you frustrated.
Trust me, when I say, this scam is a gigantic waste of time and it’s not the easiest to recover from financially. Losing $200-$1000 in upfront fees might not sound like a ton of money to some people, but it can be financially devastating, especially for those with limited incomes.
Don’t count on getting your original investment back from this scam, should you happen to get suckered into it.
Many companies claim you can make a ton of cash on the internet just by typing. This scam is a prime target for people who can type well – people with clerical jobs, stay-at-home-moms, and those who spend lots of time online. How hard could it be? If I type fast enough, I can make a ton of money, right? Seems simple but the reality is that you have to pay an upfront fee (the catch) in order to receive a packet of information or a computer disk that instructs you how to place ads for other typing positions on the Internet to sell copies of the disk or information pack to other unfortunate souls who have to contact you to get it.
One sucker recruiting another sucker – that’s what this scam is all about; another classic pyramid scheme that’s illegal and unethical. Don’t even think about it if it says “Just Type and Make Money”.
Multilevel Marketing (MLM)
Many of you have probably heard of network marketing or multi-level marketing (aka, MLM). There are many legitimate MLM and network marketing opportunities (both online and off) that allow you to work as an independent agent brokering or selling someone else’s products or services. The problem with MLM is well-documented, however. Some networking marketing or MLM opportunities run afoul by placing the recruitment of other “down line” sales reps at the very top of their priority list rather than the legitimate marketing of their product. Down line recruitment is a cornerstone concept of MLM but should be more of an organically grown outcome that results from the sales of a great product. People buy the product, they love it and end up wanting to share their passion and enthusiasm for the product by selling it themselves. When down line recruitment is the primary focus of any MLM enterprise, you should approach it with extreme caution. There are a lot of tricky pyramid schemes disguised as legitimate MLM’s which are considered fraudulent in the eyes of the Federal Trade Commission.
If you are involved in what the FTC considers a fraudulent MLM pyramid scheme, losing all of your MLM investment might just be the least of your worries.
Again, it may not be totally obvious that any particular MLM enterprise is a scam. Some other tips for spotting not-so-legitimate opportunities include taking a look at the amount of money the company guarantees to pay you.
If you’re still unsure about the legitimacy of any of these aforementioned enterprises, at the very least you should check with your local Better Business Bureau for complaints and any other publicly reported information about the company that you are considering doing business with.
Do you really believe someone would pay you $40-$50 an hour to forward emails or stuff envelopes?
Additional Resources on Internet Business Scams:
- Federal Bureau of Investigation – Internet Fraud
- Internet Business Opportunity – Avoiding Scams
- Scams 101 – Learn to Recognize Them
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