In this third and final installment of our series, we’ll round out the discussion by talking about work at home opportunities that are outright scams, as well as some that toe the line.
We’ll also provide you with some actionable principles that you can use to evaluate any work at home opportunity, and what you can do if you’ve already fallen victim.
But first, let’s talk about why is this such an important topic.
How Widespread are Work at Home Scams?
Work at home fraud is extraordinarily prevalent in today’s market.
To outline just how widespread these scams are, according to a 2007 article on Good Morning America’s website, “research indicates the ratio of [work at home] scams to legitimate opportunities is 42-to-1.”
And in reality, it’s highly likely that they’ve become even more prevalent since that time, considering that the number of internet users has more than doubled between 2007 and 2014.
However, before we get too deep into identifying these scams, let’s make an important distinction here.
Even if you find one of the few work at home opportunities that aren’t considered a scam, you shouldn’t take this to mean that it’s necessarily worthwhile, or that you’ll even recoup your initial expenses after everything’s said and done.
Why is this the case?
Distinguishing Between “Legitimate” & “Worthwhile” Work at Home Opportunities
We talked extensively about the difference between “legitimate” and “worthwhile” work at home opportunities in our previous articles, but it’s important enough that it bears repeating here:
The only real work at home opportunities are the ones where you put in the time and effort to grow your business.
However, the type of business you choose can make all the difference in the level of success you achieve.
Many of those opportunities will lead you to believe that it will take very little work to earn a large sum of money.
They will also promise you’ll be able to achieve financial independence in a short period of time.
While either of these industries can provide you with an added source of income, the reality is that the amount of time (and often money) you’ll need to commit to achieve success may not make them worthwhile in the long run.
Many times, MLM opportunities also have reputations for toeing a very fine line between being legit business opportunities and pyramid schemes.
The former can help you earn commissions on the products you sell, while the latter are focused more on how many distributors you can enroll in your downline.
And because nearly all MLM companies, even longstanding ones like Amway, focus on creating an active downline, differentiating scams from legitimate opportunities can become very blurry.
As such, we’ve mentioned on multiple occasions that the best paths to success when working from home are either a) being directly employed by another company, or b) becoming your own boss.
With this distinction out of the way, let’s take a look at why you keep seeing advertisements claiming to help you “Make $1K in the Next 3 Days!” pop up every time you’re online.
How Do Work at Home Scams Work?
When you take work from home scams down to their lowest common denominator, they’re effective because they lean heavily on psychology, emotion, and your life’s circumstances to convince you to hand over your money.
For example, according to Scambusters, work at home fraud targets four main groups of people:
- Disabled, elderly, and chronically ill individuals
- Stay at home moms
- Families with very little or no source of income
- Individuals without higher education
What do all these groups have in common? Based on their circumstances, it may be the case that they’re having difficulty making ends meet and need another source of income.
They may have a lot of weight on their shoulders, and without this additional income, there could be some dire implications. Enter work at home “opportunities.”
The underlying theme behind nearly all popular work from home scams is that they promise to help you make much more money than you already do while performing menial tasks.
Or, as this article puts it, “very often doing some simple task in a minimal amount of time with a large amount of income that far exceeds the market rate for the type of work.”
However they frame the “opportunity,” though, these scams will make it seem like you can legitimately make millions—or at least become very wealthy—very fast.
As soon as someone who’s in a dire situation or who has experienced negative life events reads these outlandish claims, they are prone to become highly impulsive as a result, and to willingly hand over their hard-earned money for something they know, deep down, is too good to be true.
Top Five Work at Home Scams
Because of the close interplay between taking advantage of your situation and using your emotions against you, work at home scams are a big business.
While there are no official totals available online, this Businessweek article from 2012 states that individual “losses can range from a couple hundred dollars … to $20,000 or more for people who get hooked on worthless business coaching or training materials that rely on pirated, decades-old books.”
And when you add up the hundreds of thousands who are scammed each year, this can translate into very big money.
So what do these scams look like? Let’s take a look at some of the most popular ones:
1. Envelope Stuffing Scam
Envelope stuffing has been around since the Depression and is perhaps the most popular work at home scam.
This involves posting flyers in public places (and now through online advertisements and Facebook) that claim to help people earn $1-2 for each envelope they stuff, with the potential of stuffing up to 1,000 per week.
They simply need to send a self-addressed stamped envelope and a $2 fee to a certain address.
But what they end up receiving is a copy of the flyer they were originally responding to, with instructions on how they can post the flyer and earn money the same way.
2. Product/Craft Assembly Scam
This scam involves assembling crafts or other types of products from your home but only after spending hundreds of dollars on equipment, supplies, and materials (often from the same company who’s promoting the work at home opportunity), not to mention the immense amount of time involved in actually making the crafts.
After submitting the finished product to the company who promised to buy them from you, you’ll likely be told that they aren’t correct, or you’ll receive some other excuse as to why they won’t pay you.
3. Email Processing Scam
This is a 21st-century version of envelope stuffing. Here, you’ll pay some fee (usually between $25 and $50) for information about how you can earn up to $X amount per email processed.
But for your money, you’ll simply receive some instructions on how to post ads like the one you responded to, and earn money for every person you sign up. Similar scams also involve “typing at home” and “forum spamming” opportunities.
4. Medical Billing Scam
These scams will often promise to provide you with everything you need to start your own medical billing business, complete with a list of potential clients, product support, and medical billing software.
Of course, no experience is necessary. But after investing hundreds or thousands of dollars, you might find that the list you received is “out-of-date and include doctors who haven’t asked for billing services.
The software they send may not even work.” You’ll also quickly learn that competition within this industry is extremely fierce and that most doctors hire large firms to process their billing; not work-at-homers without any experience.
5. Mystery Shopping Scam
This scam involves promises of high-paying jobs by shopping at retailers, purchasing products, and then evaluating your overall experience.
Although mystery shopping is a legitimate part time gig for many individuals, these companies will often require that you pay a fee to become “certified,” or to receive a list of potential employers.
However, there is no such thing as a certification for mystery shopping, and a list of employers can be found online for free.
Now, you know to spot some of the most popular work from home scams. But what if you encounter a work at home advertisement that doesn’t necessarily fall in any of the above categories? How can you tell whether or not it’s a scam?
How You Can Avoid Work at Home Scams
Follow these five simple rules for determining whether or not work at home opportunity is a scam:
1. Is It Too Good to Be True?
Just like the adage says, “If it sounds too good to be true, it probably is.”
In other words, if someone is claiming that you can make a lot of money from home, without any experience, and with only a small investment, it’s likely that it’s a scam.
2. Base Your Decision on Information, Not Emotion
Closely related to the above, when evaluating a work at home opportunity, don’t be sucked in by marketing hype, no matter how bad you may want it to be legitimate. Instead, use facts and figures to guide your thought processes. How?
Look through the website or ad for a phone number or email address (note: if you can’t find one, it might be best to stay away altogether). Then, the Federal Trade Commission recommends asking the following questions:
What tasks will I have to perform? What are the steps involved?
Will I be paid a salary or will I be paid on commission?
What is the basis for your claims about my expected earnings? Do you survey everyone who purchased the program? What documents can you show me to prove your claims are true before I give you any money?
Who will pay me?
When will I get my first paycheck?
What is the total cost of this work-at-home program, including supplies, equipment and membership fees? What will I get for my money?
Also, if you find any testimonials on the product’s website, ask the company if you can contact the individuals who provided them to very their claims.
3. Take All the Time You Need
If you’re interested in work at home opportunity and contact the company to learn more, understand that time is on your side.
After all, building a work at home business from the ground up takes lots of time and effort, so don’t feel obligated to make an immediate decision based on high-pressure sales tactics.
If the person on the other end of the line refuses to take “No” for an answer, this is probably a very strong indication that you should walk away.
4. Tap Into Your Extended Network
Sometimes, finding out information about work at home opportunity isn’t as easy as making a phone call.
But, the good news is that people who succeed at working from home are often happy to share what they’ve learned with others who are looking to accomplish the same.
If you have questions about a particular work at home job, or even just working from home in general, ask your friends and family if they know of anyone you could speak with.
Also, consumer advocacy websites like HighYa can be great resources for helping you determine if a work at home opportunity is legitimate.
Be sure to reach out to us through Facebook or by leaving a comment below, and we’ll be happy to help out.
5. Never, Ever Pay Money to Land a Job
Whether we’re talking about work at home opportunity, a traditional job, or even obtaining a scholarship, a “red flag alert” should go off in your head if you’re asked to pay money upfront. Just don’t do it. Instead, walk away.
What Should You Do If You’ve Already Been Scammed by a Work at Home Opportunity?
If you decided to invest in work at home business, only to find out it was a scam, the most important thing you can do is get the word out.
This will alert the authorities to what’s going on, and can potentially help other consumers avoid the same.
First, you should file a complaint with your local police department, as well as with the FTC.
If your work at home scam involved mail, you should also file a report with the U.S. Postal Inspection Service.
Also, be sure to write about your experience on as many consumer advocacy websites as you can, including HighYa, so that you’ll greatly increase the odds that someone else can avoid falling into the same trap.
Finally, check out the other articles in our work at home series for a complete overview of the situation.
In Part I, we take an in-depth look at what working from home entails, some of the qualities you should possess to maximize your success—and perhaps most importantly—the types of opportunities you should focus on to ensure work fulfillment.
In Part II, we examine the pros and cons of working for someone else, versus starting your company and becoming your own boss, along with the two best methods of achieving your work at home goals.
What’s your experience working from home? Have you fallen victim to work at home scam, or were you able to avoid one? Be sure to leave a comment below!