Home-Based Business Scams
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Every day, many people fall prey to home-based business “opportunities” in which scammers successfully target hundreds of people. Their tactics often involve “get rich quick” schemes and other seemingly believable employment opportunities. There are 4 groups of people that seem to be inclined to these deceptive practices:

  1. Elderly, sick, or disabled individuals- often times, these people are led to believe by society that they may experience problems in obtaining a traditional job because of their medical condition or disability.
  2. Stay-at-home mother/homemaker- are also targeted because they strongly feel that working at home seems to be the perfect solution to earn money while caring for their children.
  3. Low-income or no-income families- as bills accumulate an individual or their spouse may have lost their job or together may make a combined low-income salary and as a result feel they have to resort to the convenience of a home-based job.
  4. Uneducated persons- many people who do not have a college or graduate degree often choose to work at home because they believe there are no other options available for them to earn money.

There are primarily two types of home based business scams that people may encounter in newspaper ads, direct mail advertisements, and e-mail. Both schemes promise the prospective victims to “make money fast” in the convenience of their own home:

  1. Working from home, where you are promised to be paid by a company as an active employee (i.e. craft assembly, envelope stuffing, etc.).
  2. “Helping” you start your own business, where you work as a mystery shopper, network marketer, etc.

 The following are ten of the most common home-based business scams:

  1. Envelope stuffing scam- In this scenario, the scam artist promises the victim $3-$4 for every envelope that gets stuffed. All they have to do is pay a registration fee (usually $30) and they are guaranteed up to 1,000 envelopes per week in earnings. In the hope to receive hundreds and even thousands of dollars per week, many people send their hard earned money, only to be given advertisements to the same or other home-based schemes that are placed in pre-paid, pre-addressed envelopes. The only way to earn money is if people respond to the scheme (usually $2.00), and rarely do promoters pay anyone.
  2. Medical billing scam- In this particular scheme, the victim is enticed into believing that they can start their own medical billing service from home. For $300 to $900, they are promised state-of-the-art software to launch the business, as well as a list of local potential clients. The victim may not be aware prior to payment that most hospitals and medical facilities process their own medical billing and do not seek independent billing contractors for their patients. The software turns out to be worthless and the clientele list is outdated and incorrect.
  3. Craft assembly scam- The people behind this scam ask potential victims to pay between $20 and $40 for toy or craft supplies which they can assemble from the comfort of their own home. They are then instructed to send the completed items to various companies who will pay them for these assembled goods. The victims are turned down by the companies who claim that the toys do not meet their company standards or specifications. In the end, the victims are left with a worthless set of assembled crafts and no income.
  4. E-mail processing scam- This scheme is similar to the envelope stuffing scam. It requires a registration/processing fee and claims the opportunity to make $25 per e-mail processed. Upon the $50 mandatory payment, the scammers give instructions on how to spam others with the same add that the victim had responded to.
  5. Typing at home scam- This scheme is similar to the e-mail processing scheme. An individual is promised that they can turn their computer “into a fast money making machine.” The victim pays a registration fee and is given instructions on how to send out spam advertisements.
  6. “Make Money Fast” chain letters- This chain letter scam instructs the recipients to send their e-mail along with some money to the top names on the e-mail distribution list. The recipient is instructed to add their name on the bottom of the chain letter and is promised they will make millions of dollars when their name reaches the top of the list as the chain letter circulates. This is a type of pyramid scheme in which the names are deliberately placed and manipulated to the top of the list so they are the ones who will receive the money.
  7. Company list scam- For a small fee, those who are interested in working at home can receive a distribution of company names that will hire home workers. As enticing as this list may be, people should be aware they will eventually be given a generic list of companies that do not hire home workers.
  8. Multilevel marketing (MLM) scam- Legitimate companies such as Amway is a type of network marketing in which their business is based on their agents selling their products and services. The FTC firmly believes that corrupt MLM companies are pyramid schemes because they are more concerned with hiring new recruits rather than selling their products or services. In addition, many of these illegitimate companies advertise a product for “free” when in fact they refer to “earning commissions and bonuses in excess of the monthly purchase of the product.” 
  9. 1-900 number scam- This scam involves calling a 1-900 number to claim a free gift. The victim, enticed by the free offer, calls the 1-900 number given, only to realize that they will get charged for the phone call.
  10. Reader scam- In this scenario, people are promised they can make money by reading books for publishers. In addition to the processing fee, the victim purchases a book on how to do this, which encourages individuals to contact publishers. Not only does the victim lose their money, but they also realize publishers do not hire readers and freelance reader programs do not exist.

There are many legitimate home-based business opportunities available; however, there are also some deceptive work-at-home scams found on internet message boards, mail advertisements, and in newspapers and magazines. Many of these ads seem too good to be true, and victims who respond to them end up losing their money, never get paid, and work wasted hours on tasks that are worth nothing in the end. In order to avoid being misled by work-at-home scams, one should always use common sense. A reputable business will always provide customer references, their company’s phone number and physical address, and never create high-pressured, deceptive sales tactics towards their customers. It is extremely important to confirm a company’s reputation with the Better Business Bureau if you have any doubt concerning a home-based endeavor.

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