As you read through the job listings of any newspaper or career website, be dubious, especially about any ad that makes big promises but asks you to pay the supposed employer money first. You’ll probably come across dozens of these “opportunities” to work from home, describing a paradise in which you make thousands of dollars a month (despite your lack of experience) while setting your own hours and working as much or as little as you wish. All you have to do to get going is purchase startup materials and training—an up-front investment they imply you’ll earn back many times over! As you can probably guess, these work-athome positions are really work-at-home ploys. No one stands to profit except the entity collecting your up-front payment.
If you’re convinced that you’d never fall for a work-at-home scam, think again. The advertising materials are prepared by professional shysters, who expertly craft them to sound legitimate. You might see doctored testimonials from fictional at-home workers who’ve made more than they ever thought possible using the advertised scheme. Or their website may look just as sophisticated as that of a Fortune 500 company. With the enticements of quick riches and short workweeks, it’s hard to resist the temptation to write a check for a few dollars so you can find out more.
Many of the work-at-home scams are variations on a few basic schemes. Once you’re familiar with their features, you should be able to spot the scams from a mile away.
Medical claims processing scams
Because there are many legitimate work-at-home jobs in the medical claims field, schemes involving this industry can be quite convincing. The typical one promises to train you in a field such as medical transcription or medical coding
(matching up medical procedures with the appropriate insurance codes). You’re promised a database of physician contacts and everything you need to start a service from home, all for a several-hundreddollar fee.
Christine Durst, telework expert and author of The Rat Race Rebellion, reports that there are 42 work-athome scams for every legitimate work-from-home position.
What do you get for your money? Some outdated or inappropriate software and a list of local physician contacts that may have been photocopied from the Yellow Pages. Your chances of earning money with these materials are virtually zero.
Product assembly scams
The typical product-assembly scheme promises that you can make easy money from home by putting together craft items or other products for companies that sell them. However, most products sold today are either assembled by factory workers (often in places like India and China) or simply packaged with assembly instructions (think IKEA). No reputable company would outsource product assembly to a random group of home-based workers.
The scheme works by asking you to purchase the materials and instructions for putting together products like baby booties, plastic signs, or toy clowns. You’re told that a company has already committed to purchase the assembled products, at a significant profit to you, provided you follow the instructions and meet quality standards. But once you
submit your assembled products for sale, you’re invariably told that they don’t meet unspecified “quality standards.” Never mind that you followed the assembly instructions to a T and put together the products perfectly.
The company sponsoring the scheme profits every time an at-home worker purchases instructions and materials. You, on the other hand, will get nothing in return for your investment but some unsaleable merchandise.
This is one of the oldest tricks in the book. A company promises— maybe even “guarantees”—hundreds of dollars a week just for stuffing envelopes in your own home. The ads appeal to many people because no training is necessary (everyone knows how to put paper into an envelope), and you can do it while watching Oprah. But the reality is that no established business actually depends on at-home workers to stuff its envelopes anymore. In fact, the U.S. Postal Inspection Service reports that in “practically all businesses, envelope stuffing has become a highly mechanized operation using sophisticated mass mailing techniques and equipment which eliminates any profit potential for an
individual doing this type of work at home.”
When you respond to an ad for at-home envelope stuffing (usually by paying a fee), you don’t get envelopes to stuff. Instead, you receive promotional material on other work-at-home programs. Getting the details of these plans requires paying yet another fee. What you ultimately get are instructions on making money by placing classified ads and setting up your own envelope-stuffing work-at-home scheme. The scam works by getting more and more people to pay fees to
get started and to obtain more information on fraudulent work-at-home programs. It sounds absurd, but plenty of
pranksters have made tidy profits preying on others’ wishes to work at home.
Direct sales pyramid schemes
Direct sales aren’t all bad. Many perfectly legitimate, profitable companies, like Avon and Tupperware, employ home-based workers to sell products directly to consumers. These sales representatives earn commissions for every product they sell, and commissions for every product sold by new representatives they recruit for the company. Direct sales can be a terrific work-from-home option for charismatic individuals who love interacting with people.
Unfortunately, a fair number of crooks have taken the direct-sales model and corrupted it into a work-from-home ploy commonly known as a “pyramid scheme.” In these schemes, companies earn money primarily by recruiting new investors to purchase large quantities of product for resale. There is usually no real market for the products, and the company puts no effort into product advertising or marketing. The more “sales representatives” who sign up, the more money the people at the top earn, regardless of the number of products actually sold to consumers. Sooner or later, the pyramid collapses.
Here’s some more detail on how these schemes work: Let’s say you agree to do sales for a company. To get started, you’re required to buy $5,000 worth of product, which you’re told will earn you a $2,000 profit. The company also promises to reimburse your initial $5,000 investment if you recruit two new sales representatives. After weeks of effort, you convince two friends to sign up, so you at least get your money back. But neither you nor your friends succeed in selling any of the product—in fact, you start realizing that nobody wants it. Before long your friends are out $5,000 apiece and boiling mad at you, and you’ve wasted a lot of time in order to break even. You also could be charged with fraud for enticing other people to invest.
Think you might have found a legitimate direct sales opportunity? Don’t sign up before finding out as much about the company as you can, including checking with your local Better Business Bureau to verify its business history. And trust your gut—if an opportunity sounds too good to be true, it probably is.
Recognizing other work-at-home scams
The scams we’ve described aren’t the only ones out there, but once you know the pattern, you should be able to steer clear of all of them. First, be wary of any opportunity that promises you’ll earn thousands of dollars a month or more. By and large, legitimate work-at-home jobs do not pay particularly well.
Second, watch out for the “no experience necessary” line, which is used to reel in the most vulnerable work-at-home job seekers, like people who’ve been out of the workforce for many years. These people are often more than willing to pay $20 or $50 for a start-up kit that will show them how to earn a six-figure income in their pajamas.
Be suspicious of any company you’ve never heard of. Work-at-home scams are typically run by fly-by-night entities that can close up shop at a moment’s notice, not major corporations with offices all over the country. And avoid opportunities that require you to pay cash before you get started.
Finally, ask for references. Don’t settle for written testimonials, which are easy to fabricate. Instead, get the full names and telephone numbers of actual people who have profited from the business opportunity before, and call those people to talk details. Any company that can’t give you references is one you shouldn’t consider.
For more on work-at-home fraud. The U.S. Postal Inspection Service offers a free DVD on avoiding work-at-home scams. Just call 800-STAMP-24 (800-782-6724) and ask for a copy of Work-at-Home Scams: They Just Don’t Pay.