Millions of people lost their jobs during the recession. They tried to look for extra ways to augment their income and support their families, turning to work-at-home offers that, at the time, seemed like the perfect solution to their problems. Unfortunately, many of those were scams.
According to the Federal Trade Commission, cases of work-at-home scams have been on the rise. It received nearly 8,000 complaints in 2009. “Possibly only one 1 in 55 work-at-home-opportunities are legitimate,” says the consumer protection agency. Here are the most common scams.
1. Check cashing
Companies recruit members to be “financial managers” or “sales managers.” Your job—aside from completely useless paperwork that just serves to hide the operators’ real intent—is to cash in checks or deposit funds into their own accounts, and then wire the money abroad. You supposedly receive a small commission for these deposits.
However, these checks inevitably bounce, or the money turns out to be counterfeit. Naturally the banks notifies poor unsuspecting you, who realize that you’ve sent your own money to the crooks, while you’re left to deal with a case of bank fraud.
Needless to say, you should be suspicious of any company that makes you a “money intermediary.” Why would they need the funds to be deposited to your account? A real company would have its own deposit account and a payment method for international clients.
2. Pyramid schemes.
This is one of the oldest scams in the book, but it still hooks in unsuspecting home entrepreneurs. Basically, you buy into a certain scheme, paying for the opportunity to sell a particular product or service to somebody else. The incentive is to recruit more members, since the bulk of income is from the commissions of people you recruit.
The problem? You’re not actually selling a product or service—or at least, anything that’s worth buying. Be wary of any company where you spend more time recruiting members than selling a product, and are actively encouraged to hold “recruitment parties” or other gimmicks.
3. Medical billing
The scam supposedly trains you to process insurance claims for medical professionals who don’t have the time to wade through the paperwork. The big problem is that you never get any real training. You’re charged crazy fees for software, marketing materials, supposed training sessions and even a starting directory of doctors who you can contact—but all of these are worthless.
You can buy the software anywhere for a fraction of the price, you can make your own marketing materials, the training sessions are always cancelled, and think about it—if everybody who signs up for this course gets that directory, than those poor doctors have over a thousand medical billing wanna-bes chasing them down.
You’re hired to shop and send the goods to “re-shippers.” The address is usually a P.O box in an out-of-state location. The problem? You’re given a stolen credit card, and when the authorities catch on—and you try to point them to your “boss”—you find the P.O box is owned by somebody under a false name, and you have inadvertedly participated in credit card fraud.
4. Processing Rebates
The most famous fraud case is against Penbrook Productions, which hooked thousands into buying a “product rebate kit” that included training materials and a list of companies that supposedly need that service. The kit cost nearly $200, but many people bought into the scheme because of Penbrook’s promise that they could earn over a thousand dollars a week. Surprise, surprise—most people didn’t get the kit, and those who did found out the kit was just full of instructions on how to sell Penbrook kits to other people. FTC eventually closed Penbrook down in 2010.
5. Mystery Shoppers
Thousands of college students get lured by the promise of getting paid to shop. Basically, they sign up for the “Mystery Shopping Club of America” and for a small registration or membership fee are told to buy items and then review the products.
While there are legitimate “shopping clubs” these don’t require you to pay any money to take on any shopping assignments. And there is no international “certification” course to be a “shopper” so any diploma or badge you ever get is worth squat.
6. Job List
These con artists have no heart. Here, they lure the unemployed by promising a list of work-at-home jobs, all pre-screened and eager to hire. You just have to pay up, and if you don’t get a job, they’ll give you a full refund. Hah! You can guess what happens next. Once you pay up, you’ll never hear from them again.
7. Assembly Work
Basically, you pay to get a craft kit, which you can put together in your home. Then, you send the finished item to the company, who’ll pay you for your labor. Unfortunately, everything you send gets rejected for “poor quality” or some reason or another.