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Beware of Work-at-Home Scams

If it Sounds too good to be True, it Probably Is!

In a report issued on January 4, 2012 by the Federal Trade Commission, work-at-home scam victims received an average of only $9.70 per person in a settlement with a Texas-based company. Not very much for the pain and agony each of the scammed people experienced. With more Americans out-of-work, the economic downturn has given work-at-home scammers a boost. The number of complaints about work-at-home scams filed to the FTC grew to about 10,000 between 2008 and 2010.

The firms often take advantage of vulnerable Americans, including the unemployed and elderly, by offering them the opportunity to make money by stuffing envelopes, doing online searches or assembly or craft work, according to the FTC. Dangerous scams of all varieties have popped up since the financial crisis, including mortgage relief scams and employment-related ID fraud. Others have included lottery sweepstakes or asking potential employees to pay fees in order to be considered for a job.

The FTC announced new regulations aimed at helping consumers avoid work-at-home scams. The new rule, which takes effect March 1, requires businesses advertising work-at-home opportunities to make certain disclosures, including backing up any claims of future earnings, in a one page document.

One good resource is the National Consumers League’s Internet Fraud Watch. They recommend the following steps before you become involved in a work-at-home job.

  • Know who you’re dealing with. The company may not be offering to employ you directly, only to sell you training and materials and to find customers for your work.
  • Don’t believe that you can make big profits easily. Operating a home-based business is just like any other business – it requires hard work, skill, good products or services, and time to make a profit.
  • Be cautious about emails offering work-at-home opportunities. Many unsolicited emails are fraudulent.
  • Get all the details before you pay. A legitimate company will be happy to give you information about exactly what you will be doing and for whom.
  • Find out if there is really a market for your work. Claims that there are customers for work such as medical billing and craft making may not be true. If the company says it has customers waiting, ask who they are and contact them to confirm.
  • Get references for other people who are doing the work. Ask them if the company kept its promises.
  • Be aware of legal requirements. To do some types of work, such as medical billing, you may need a license or certificate. Check with your state attorney general’s office. Ask your local zoning board if there are any restrictions on operating a business from your home.
  • Know the refund policy. If you have to buy equipment or supplies, ask whether and under what circumstances you can return them for a refund.
  • Beware of the old “envelope stuffing” scheme. In this classic scam, instead of getting materials to send out on behalf of a company, you get instructions to place an ad like the one you saw, asking people to send you money for information about working at home. This is an illegal pyramid scheme because there is no real product or service being offered. You won’t get rich, and you could be prosecuted for fraud.
  • Be wary of offers to send you an “advance” on your “pay.” Some con artists use this ploy to build trust and get money from your bank. They send you a check for part of your first month’s “pay.” You deposit it, and the bank tells you the check has cleared because the normal time has passed to be notified that checks have bounced. Then the crook contacts you to say that you were mistakenly paid the wrong amount or that you need to return a portion of the payment for some other reason. After you send the money back, the check that you deposited finally bounces because it turned out to be an elaborate fake.
  • Do your own research about work-at-home opportunities. The “Work-At-Home Sourcebook” and other resources that may be available in your local library provide good advice and lists of legitimate companies that hire people to work for them at home. You may discover that these companies hire only local people and that there is nothing available in your area.

One big change in recent years is the use of online promotions to set up fraudulent work-at-home opportunities. The Internet has also allowed scam artists to move beyond more mundane envelope-stuffing and home assembly scams. Some of the more common schemes offer consumers the opportunity to sell Google ads, teach consumers how to make money from Twitter and other social-networking tools.

Undoubtedly, some work-at-home offers, such as home-based customer service agents, can be legitimate. So, do your homework.

Unfortunately in our society the bad times bring out the bad people. These scammers sense the desperation of so many Americans just trying to make ends meet. It’s not a pretty picture but you can protect yourself by checking references and ask someone you trust whether they think it sounds too good to be true. If it does, in all likelihood it is a scam. Remember the old adage: There is no such thing as a free lunch!

Blog posted by Steven Mintz, aka Ethics Sage, on January 7, 2012