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How To Avoid Work-at-Home Scams

One Result of the Worldwide Financial Crisis

With the current economic uncertainty and the great recession that started in the year 2008, more and more Americans are finding themselves unemployed, underemployed, or looking for extra income. As housing values have decimated many families’ net worth and feeling of financial stability, the search for extra disposable income has greatly increased. There is a great need for employment and additional income. Sadly, this development wasn’t lost on scammers and con artists that use the internet to find victims. This guide identifies the most common “work at home” scam patterns so users can get a general idea on what to look out for, key warning signs to check for, and other key information they need to prevent being victimized by work at home fraud and scams.

Online Scam Models

There are two basic ways online work at home scams work. The first is the “bait and switch” model. Ads tease and excite would-be home based workers into clicking the ad, only later to find out that they have to buy a book, sign up for “training,” or engage in any other arrangement where they have to spend money. This is a fraud because the main reason you are even answering online ads for work at home opportunities and freelance projects is for you to get paid and not for you to pay out money. Sadly, bait and switch is an extremely prevalent form of work at home scams perpetrated in the United States.

The second general model for work at home scams is the multilevel marketing tie-in. While multilevel marketing in of itself is a legitimate business model, there have been so many scams and fraudulent versions of this model that the term “multilevel marketing” has left a bad taste in many peoples’ mouths. This type of work at home scam is closely related to bait and switch. While there is some sort of switch happening it’s more of a mislabelling or a mischaracterization. Sure, you are in a technical sense working but not in the way you would expect since freelance work at home projects pay once you do the actual paid assignment. Most legitimate work at home jobs give you test assignments to see if you have the basic proficiency, common sense, and determination to follow through so they can weed out unqualified applicants. The MLM scam is different because there is no payout once you start doing the “paid work.” That’s the big difference. It’s basically a commission model.

Most common online work-at-home scams

Assembly jobs

There are many ads that say you can make a lot of money assembling items that you put together and send back to the work-at-home company. Why is this a scam? First of all, you have to spend money on the materials that you’re supposed to assemble. The scammers price these kits so cheaply that many victims don’t consider it a hassle. However, assembling these kits to the required volume and almost impossible deadlines turn these assembly offers into scams.

For example, you order a raw material package that costs only $25 and this raw material package turns out to be a fairly decent sized box with a lot of cheap pieces. You have to assemble the materials in an inconveniently short amount of time. You can bet that most of the people that ordered the package from the work at home assembly job company would never bother to assemble. This is especially true if the assembly requires a lot of labor intensive steps. While this type of work at home scams will fail if perpetrated in a low cost wage country like China, India or the Philippines, it succeeds in the United States because the cost of one’s time is worth much more in developed countries than in developing countries. Another factor that discourages these scams from reaching developing countries is the comparatively higher cost of freight in these countries.

Work at home data entry jobs

While there are many legitimate data entry work at home jobs like form filling, account creation, SEO (search engine optimization) support services and similar projects available online, there are also a lot of mislabeled data entry jobs advertised on the internet. One common scam involves advertising “data entry” that earns people several hundred dollars per day. Clicking through the ad, people soon realize that this is a mischaracterization. This is actually an affiliate marketing training system. Sure, some webmasters make hundreds of dollars per hour but they’re the proverbial needle in a haystack. The vast majority of people that do affiliate marketing don’t make anywhere near the big players. Yet the big affiliate marketers’ incomes are used to draw potential victims. While it is true that online marketing requires a lot of form filing and account creating and similar tasks, it cannot be ethically labelled as a data entry job. The proper categorization for this kind of livelihood is a marketing job.

Another class of data entry job scam is the sale of e-books that lists these so called jobs. True to their word, the victim would get an e-book that lists data entry jobs. So far so good, right? However, upon closer analysis, these jobs either only apply to very experienced people, need specialized skills, are actually require to physically report somewhere. The latter requirement pretty much destroys such listing’s usefulness to the job seeker. If you’re looking for a home based job, it’s obvious that your travel options are limited. If the job listing you got requires you to show up at some location physically once a month, it might be a deal killer for you. Be on the lookout for these types of seemingly legitimate but useless and ethically borderline e-book shenanigans.

Multi-Level Marketing

There is a saying that there are more pyramids in the US than in Egypt. How? The proliferation of pyramid scams posing as multilevel marketing opportunities. In terms of work at home scams, multilevel marketing schemes are probably one of the most misrepresented. Using the come on of gaining easy online jobs, multilevel marketing promoters get a lot of views to their ads through these mischaracterizations. The scam normally works this way: The job applicant would sign up to the MLM scheme, it’s normally free to join but they have to recruit people, and eventually money is required to get a commission. The job hunter spends a lot of time creating a down line based on the ad. The scammer manages to recruit a massive down line of hapless job hunters. Since the scammer is the “up stream” of the MLM schem, the victims who did all the work get pennies for all their effort while the scammer generate a lot of money. The scammer is able to amass a massive downline due to bogus home based job opportunities and these thousands of people have produced thousands of referrals each. This all adds up to a huge amount of money for the scammer. For each individual referred, however, the trickle of pennies isn’t worth the time and effort. Technically, this is legal but it sure is at the borderline of “scammy” conduct due to the amount of frustration and betrayed trust this type of scheme generates.

Start your own online business

Another fairly common bait and switch scam is the online business scam. These are normally promoted in the classified ad section of discussion forums, e-mail groups, and social networking sites like Facebook and Twitter. These are fairly basic scams. They get the reader excited about owning his own online business. Most sales pitches show screenshots of ridiculous amounts of money being made on a daily basis and dubious testimonials from people claiming that they made money using this system. The sad reality is that these scams are just selling a pipe dream. They are basically exploiting people’s greed, wishful thinking, stupidity, desperation, or exploiting their hope for a better tomorrow. Either way, whichever form it takes, besides the fact that there is no work at home job, there is no online business offered because they have to buy a guide or e-book. This e-book teaches them the secret to blogging for a living, mobile marketing for a living, selling articles for a living, and a wide range of dubious online business models that supposedly yield a lot of money.

What is not discussed is these “money making methods” is TRAFFIC. While these methods will work for a very small fraction of the population (people who know how to market or people who know how the internet works), for the large majority of people who fall for these kinds of scams, they just end up with an e-book that they don’t end up reading or using. Why? They don’t have the technical proficiency to pull it off or they just lack the motivation. One famous online marketer justified this business model this way. He said that selling “pipe dream” e-books of online businesses to prospective online business owners is no different from gyms offering memberships to people who want to use gym equipment. Gyms are just selling you the right to use their equipment. People spend a lot of money and are rebilled monthly and they end up not going to the gym after a few month. The gym owner keeps reselling the gym memberships knowing that only a small fraction actually use their memberships and use their facilities. What happens is that gym’s oversubscribed, there’s tons of recurring income and the gym’s physical capacity is never reached. In the end, this affiliate marketer is saying that e-books are just selling you the opportunity, the reality depends on you. While technically this is true, it does amount to exploitation when the “online business” is mislabeled as a “work-at-home job.”

We’re not saying that these are all scams and they will never work, we are saying that the way they are marketed should raise red flags. For these e-books to produce value to the buyer, the buyer has to be motivated enough, have a lot of common sense, and have a lot of intelligence and creativity to learn quickly and improvise. A lot of these online business models need the combination of these high level traits/skills to pull off. Sure, there are millionaires who made their money through concepts discussed in online business e-books but they are one in thousands. The vast majority that buy the e-book never bother to refund, never bother to read through the e-book, or they start but they fail to follow through.

Processing Insurance Claims

Another common work at home scams is a situation when a person is “hired” he has to buy an expensive equipment to a process claims. Not only you have to buy equipment, you have to pay for your specialized training, and fork over money for specialized software. Many medical and legal transcription jobs offered in the United States fall under these categories. They victimize people that are looking for transcription jobs and they end up for paying for all these complicated software and specialized hardware.

This type of scams does not work overseas, especially in developing countries because first of all, people don’t have the resources to fork out for expensive software, hardware and training. Second, the shipping costs from the US to these places are quite prohibitive thereby reducing the scammer’s profit margins to zero. However, people in the US, Canada, Europe and Australia and other developed countries should definitely be on the lookout for claims processing, transcription and other types of “analysis” jobs.

Envelope stuffing

This is probably the oldest work-at-home scam. It predates the internet. Back in the 60’s and 70’s if you turn to any newspaper’s or comic books’ classified ads, they have classified ads carrying this type of scam. You would see “Make money at home stuffing envelopes” and, in fine print, it would say, earn $3 to $4 an hour. Not surprisingly, you have to spend money on a guide to learn how to do this. When the guide comes, you learn how to solicit companies to pay you to stuff envelopes. You also have to front your own money to put stamps on the envelopes and shoulder the costs of the envelopes and the letters. Sadly, this is all just a pipe dream because, starting as early as the 60’s, many companies started switching over to automate envelope stuffing and stamping machines. Also, come the 80’s, mail merge made writing customized e-mails obsolete. Similarly, automated stuffing machines and services completely destroyed the manual envelope stuffing business.

While this business did exist, probably in the 50’s and the 60’s maybe up to the 90’s at that, it is pretty much dead now and the only reason it is alive is because people are still making good amount of money selling ebooks–tricking people into thinking that they could make 3-4 dollars per hour stuffing envelopes. When you see this type of ad, run away, it is not worth your time.

Beware of work at home scam red flags

The recession has really put a lot of pressure on many people to look for sideline income, full time income, and part time income. While there is a lot of stress involved in this process, it doesn’t mean that you have to take leave of your common sense when looking for work at home employment. Be on the lookout the following scam red flags:

Buy an e-book

99.9% of the time if the work at home job or data entry job ad you clicked requires that you buy an e-book, this is bogus. Run away, Quickly.

Having to pay for training

There are many freelance sites that train people by giving them small unpaid tasks to do. These are tasks that normally tests prospective applicants in terms of the jobs they are applying for. These screening procedures filter people that don’t have the will power or determination to start or finish the job. You reasonably would want to filter these people out because you don’t want flakes. Also, it filters out people who can’t follow basic instructions. You obviously don’t want these types of people working for you because it would cripple your business because of slow delivery time and substandard quality. These types screening procedures are fine and legitimate. However, if you have to pay to be trained so you can get a “job”, that’s a major red flag and it’s a major hallmark of a scam program. If you are asked to pay for “training,” run away.

Paying for equipment

Never ever pay for equipment. Unless you sign up for an e-book which trains you for a real business and the business requires special equipment. In this case, make sure that you have the freedom to buy the equipment from other suppliers not just the company “training” you. Make sure that the business is a real business not fake claims handling, fake medical transcription, or fake legal transcription. The truth of the matter is that medical and legal transcriptions jobs in the United States and elsewhere (and even outsourced transcription jobs) are disappearing because of advances in transcription software. Most hospitals and law firms which used to be the biggest consumers of these types of service switched over to automated transcriptions software. Real transcription jobs are fast dying up. Any job that requires you to buy equipment must be examined closely. Look at the nature of the business and make sure that it is viable and real. If not, you’re just wasting time and money.

Look for impossible conditions

If the work at home jobs have provisions to make it difficult to execute, be on the lookout it might be a trap to snag you once you’ve spent money. Be very careful of this because this is a very clever way of making people part with their money. Make sure that it is also necessary. For example, certain transcription jobs, data entry jobs require tight deadlines, those are legitimate. However, if you’re considering an assembly job and it requires assembling very complicated items (like assembling a jigsaw puzzle almost) and the work at home company wants it overnight, you’re probably being scammed.

Hopefully this guide gives you enough awareness of the different types of fraudulent schemes being done online and empowers you to be very critical in reading classified ads. Another key warning is a lot of these scams are advertised not just in job ads sections but also in business opportunity websites. In this tough economy, many people are selling pipe dreams to exploit people’s insecurities and desperations. Don’t become a victim.

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