Home-based business and work-at-home opportunity scams rank very high on the list of the top types of Internet fraud. In this issue, we’ll focus on the Top 10 home-based business/work-at-home scams

1. Top 10 Home Based
Business Scams &
Tips on Avoiding
Scams
Home-based business and work-at-home opportunity scams rank very high
on the list of the top types of Internet fraud. In this issue, we’ll focus on the
Top 10 home-based business/work-at-home scams
Prepared by
Dhanapal Sudhakar

2. Today’s issue is about a very important topic that :
home-based business scams and work-at-home scams.
However, before we get going, an important point: The FBI
reports Web fraud claims rose sharply in 2002. In fact, they
*tripled* from a year earlier.
Home-based business and work-at-home opportunity
scams rank very high on the list of the top types of Internet
fraud. In this issue, we’ll focus on the Top 10 home-based
business/work-at-home scams. We’ll give you the straight
goods on envelope stuffing, mystery shopping, and other
common home-based business “opportunities” you may
have seen floating around the Net.
Then in the next issue, we’ll give you some important
tips you can use to kick the tires of any online job offers or
business opportunities you find so you can protect yourself
from those that are scams.
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3. There are two basic types of scams involved here.
Scammers using both types are aiming at folks who want
to make money from home, either by:
1. Having you work from home, doing envelope stuffing,
craft assembly, or other tasks where you are (supposedly)
paid by a company as an employee. There are certainly
some legitimate telecommuting jobs, but work-from-home
jobs are often just big scams. Before we go any further, a
sobering quote: “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.
2. “Helping” you start your own home-based business,
as a mystery shopper, network marketer or other
businesses where the only money anyone sees is the
money the scammer pockets.
Certainly, there are LOTS of legitimate businesses that can
help you start your own home business. We’ll help you
figure out which are real — and which are just scams.
Why Are These Scams So Successful?
It all comes down to psychology. Besides the “make money
fast” dream that many Internet newcomers fall prey to,
home-based “opportunities” scammers mooch off the
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4. following groups. Perhaps you belong to one or more of
them:

The Sick, Disabled, or Elderly: If you are elderly, ill, or have a
disability, you may have problems landing a traditional job.



The Stay-At-Home Mother: Whether you have a spouse or
you’re single, you may be looking to supplement or create an
income while raising children.


The Low-Income or No-Income Family: You or your spouse
may have just lost your job, and you feel desperate and
anxious to find work as the bills pile up.


The Person without Higher Education: You’re not stupid or
dumb — you just didn’t go on to college or university.



To summarize, these scammers are often preying primarily
on the sick, the disabled, the elderly, the unemployed,
parents, and people without a lot of money.

Note: These scams are not ranked by dollars lost or people
scammed. In fact, there’s nothing scientific about the list.
It’s just the ten home-based business scams we find the
most disturbing.
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5. This scam encourages you to assemble toys, dolls, or
other craft projects at home with the promise of high per
piece rates. All you have to do is pay a fee up-front for the
starter kit… which includes instructions and parts. Sounds
good? Well, once you finish assembling your first batch of
crafts, you’ll be told by the company that they “don’t meet
our specifications.” In fact, even if you were a robot and
did it perfectly, it would be impossible for you to meet
their specifications. The scammer company is making
money selling the starter kits — not selling the assembled
product. So, you’re left with a set of assembled crafts…
and no one to sell them to.
In this scam, you pay $300-$900 for everything
(supposedly) you need to start your own medical billing
service at home. You’re promised state-of-the-art medical
billing software, as well as a list of potential clients in your
area. What you’re not told is that most medical clinics
process their own bills, or outsource the processing to
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6. firms, not individuals. Your software may not meet their
specifications, and often the lists of “potential clients” are
outdated or just plain wrong. As usual, trying to get a
refund from the medical billing company is like trying to
get blood from a stone.
This is a twist on the classic “envelope stuffing scam”
(see #1 below). For a low price ($50?) you can become a
“highly-paid” email processor working “from the comfort
of your own home.” Now… what do you suppose an email
processor does? If you have visions of forwarding or
editing emails, forget it. What you get for your money are
instructions on spamming the same ad you responded to
in newsgroups and Web forums! Think about it — they
offer to pay you $25 per email processed — would any
legitimate company pay that?
In this one, you pay a small fee for a list of companies
looking for home workers just like you. The only problem
is that the list is usually a generic list of companies,
companies that don’t take home workers, or companies
that may have accepted home workers long, long ago.
Don’t expect to get your money back with this one.
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7. No need to spend too much time (or money) on this
one. 1-900 numbers cost money to call, and that’s how the
scammers make their profit. Save your money — don’t call
a 1-900 number for more information about a supposed
work-at-home job.
If you use the Internet a lot, then odds are that you’re
probably a good typist. How better to capitalize on it than
making money by typing at home? Here’s how it works:
After sending the fee to the scammer for “more
information,” you receive a disk and printed information
that tells you to place home typist ads and sell copies of
the disk to the suckers who reply to you. Like #8, this scam
tries to turn you into a scammer!
Well, this one’s at least half-true. To be completely true,
it should read: “Turn your computer into a money-making
machine… for spammers!” This is much the same spam as
#5, above. Once you pay your money, you’ll be sent
instructions on how to place ads and pull in suckers to
“turn their computers into money-making machines.”
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8. If you’ve heard of network marketing (like Amway),
then you know that there are legitimate MLM businesses
based on agents selling products or services. One big
problem with MLMs, though, is when the pyramid and the
ladder-climbing become more important than selling the
actual product or service. If the MLM business opportunity
is all about finding new recruits rather than selling
products or services, beware: The Federal Trade
Commission may consider it to be a pyramid scheme… and
not only can you lose all your money, but you can be
charged with fraud, too! We saw an interesting MLM scam
recently: one MLM company advertised the product they
were selling as FREE. The fine print, however, states that it
is “free in the sense that you could be earning
commissions and bonuses in excess of the cost of your
monthly purchase of” the product. Does that sound like
free to you?
If you’ve been on the Internet for any length of time,
you’ve probably received or at least seen these chain
emails. They promise that all you have to do is send the
email along plus some money by mail to the top names on
the list, then add your name to the bottom… and one day
you’ll be a millionaire. Actually, the only thing you might
be one day is prosecuted for fraud. This is a classic
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9. pyramid scheme, and most times the names in the chain
emails are manipulated to make sure only the people at
the top of the list (the true scammers) make any money.
This scam should be called “Lose Money Fast” — and it’s
illegal.
This is THE classic work-at-home scam. It’s been around
since the U.S. Depression of the 1920s and 1930s, and it’s
moved onto the Internet like a cockroach you just can’t
eliminate.
There are several variations, but here’s a sample: Much
like #5 and #4 above, you are promised to be paid $1-2 for
every envelope you stuff. All you have to do is send money
and you’re guaranteed “up to 1,000 envelopes a week that
you can stuff… with postage and address already affixed!”
When you send your money, you get a short manual with
flyer templates you’re supposed to put up around town,
advertising yet another harebrained work-from-home
scheme. And the pre-addressed, pre-paid envelopes? Well,
when people see those flyers, all they have to do is send
you $2.00 in a pre-addressed, pre-paid envelope. Then you
stuff that envelope with another flyer and send it to them.
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10. This is the cardinal rule. You should treat working at
home just like you would treat working for an employer at
their place of business.
If you were going for a job interview in the ‘real world,’
how would you react if the interviewer asked you to pay
$50 or $100 to land the job, for starter materials, or for a
‘good faith’ payment to make sure you were serious about
the business?
You’d think it was absurd. No legitimate company
charges employees a fee for a job. Whenever you’re asked
to pay for the chance at a job, or information about work-
from-home jobs, you know it’s a scam.
Home-based businesses, on the other hand, may
require start-up costs to cover investments, materials,
franchises, or other items. As we state in the next step,
check things out before you pay anything.
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11. Have you heard of the business that’s soliciting your
money? If not, check them out carefully. Make sure they
have a physical address and a phone number. Call to see if
it’s a real phone number. Do a search on
http://www.Google.com to see if you can find any positive
or negative comments. Check references carefully.
Some warning signs of scammer companies:
 They use free Web hosting services (such as Tripod or
Geocities). 


 They use free Web email services (such as Yahoo!
Mail or Hotmail). 


 They use Post Office boxes for mailings and don’t
disclose their real addresses. 


 They won’t give you a telephone number where you
can contact them. 
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12. This sounds counter-intuitive, but if you are going to
buy a starter kit or make some investment relating to a
home-based business, purchase using your credit card.
That way, if you don’t receive the items, or if things go
wrong, you can dispute the charges with your credit card
company. If you’re unsure how to do this, speak to your
credit card company *before* you make the purchase.
Every scammer will promise unlimited wealth and easy
work. With a little virtual footwork, you can see whether
you can make money doing this kind of business or work.
If you’re thinking of starting a medical billing practice, for
example, call a few doctors and hospitals in your city or
town and ask if there would be a market for your services.
As we mentioned in the last issue, you may be surprised to
discover just how limited the market really is.
Companies that don’t state their names, costs, or other
important information in their ads usually have a good
reason to do so — they’re scammers. As well, be wary of
claims that you can make up to $1,000 a week” doing just
a few hours’ worth of unskilled work. Don’t be blinded by
greed.
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13. If you were an honest employer (or client, if you’re
looking to work from home), think about whether you
would make the same kind of offer you’re being pitched.
For example, you’ve read an ad where you can earn $1-2
per piece stuffing envelopes. But companies nowadays
have access to sophisticated mailing equipment that can
stuff thousands of envelopes an hour — why would they
pay you so much more?
If you’re really interested in working for yourself,
starting your own home-based business can be a great
idea. It also involves a lot of work, and much of the time,
some investment. This is not a decision to make lightly, nor
should you start a business just because you can’t find a
job.
Having said that, starting your own business — if you’re
willing to do your homework and do what’s necessary to
make it a success — may well become one of the best
decisions you ever made. There are lots of great resources
on starting a legitimate home business. (But remember,
you won’t receive them via spam.)
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14. You may be in dire straits financially, but it’s worth your
while to act calmly and professionally — just like you
would in a real-world job search.
Posting messages on forums saying that you are in
financial trouble, or desperate to find work from home is a
bad idea. Desperation is like blood to sharks — it’ll bring
all of the scammers out of the woodwork, and you’ll be
inundated with phony offers.
If you’re looking to start a home-based business, or
looking for telecommuting work you can do at home, you
may have a considerable search ahead of you. There are a
*lot* of people in the same boat, many of whom are
falling prey to scams every day.
Don’t let scammers use high-pressure tactics to sucker
you in. If you’re given a time-limited offer, there’s usually a
reason why — scammers know that pressure brings in
people! Even if you’re in dire straits, it pays to be patient…
so that you don’t lose money to schemes that never
materialize.
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15. Fraudulent offers for home-based businesses or work-
at-home opportunities almost always arrive as spam. The
better it sounds, the less likely that it’s legitimate.
Scammers aren’t planning to deliver anyway, so what
does it matter to them what they promise? Delete and
move on.
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