Navigating the Perils of Scams and Fraudulent Programs

Trying to be your own boss is not without its perils. Beyond the obvious one that you will simply fail to make money, particularly if you're working for yourself instead of being an employee, there is the very real danger of being suckered.

There are plenty of con artists out there who are perfectly willing to take your money and leave you with nothing. Many of these prey upon the hopes and dreams of people who want to work at home or start their own businesses.

Many of them claim to be offering lucrative jobs that can be done from one's home. However, when you send them your start-up money, you never hear anything more. Or the "envelope stuffing" work turns out to be nothing more than instructions on how to obtain mailing lists and use them to send out "work at home stuffing envelopes" fliers to a new round of suckers.

Every year the Better Business Bureau receives thousands of complaints about fraudulent work-at-home promotions. Many of these are heartbreaking cases of people in desperate straits who have lost money they can't afford to lose in an attempt to find work when conventional workplaces are turning them down.

However, this shouldn't have to put you off on the idea of working at home altogether. Here are some ways to recognize crooked work-at-home schemes so you can avoid them and concentrate on the honest ones:

Be wary of anything that asks for money upfront without making it clear exactly what they will be providing in return. Unless they are clearly selling a book, or software, or some other tangible good, it is very likely that your "startup fee" will simply go straight into a scamster's pocket. This is especially true if the sums are large.

Be very wary of anyone who promises huge returns for very little effort or talks about "making thousands in your spare time." This is particularly common in come-ons for Internet business scams. Real Internet marketing, like any business, requires a significant outlay of effort to realize success. It's just a different kind of effort.

As a general rule, almost all "envelope stuffing" jobs are scams. Twenty or thirty years ago there was a real market for envelope stuffers. However, modern mechanical envelope-stuffing has rendered this sort of work obsolete. Any company sending out enough mail to hire employees to stuff envelopes can buy an envelope-stuffing machine for less than the wages they'd pay.

And if it sounds too good to be true, it probably is. If it feels crooked, you're probably right.

Another, more dangerous, form of scam is the fraudulent multi-level marketing scheme. While fake work-at-home placement services and the like merely steal your money, a fraudulent multi-level marketer can leave you facing criminal charges.

Because referrals and downline sales are central parts of multi-level marketing, victims can quickly be transformed into perpetrators, simply by bringing further victims in and receiving money from their sales of worthless or non-existant products. When everything comes crashing down, it can be very difficult to prove that you didn't know that you'd been suckered into promoting a dishonest program.

However, this doesn't mean that all MLM's are scams. (Although to be fair, there are writers who have put forth convincing arguments that the MLM system is by its nature morally corrosive, even if it is not intended as such.) It does mean that you need to be very careful when deciding what programs to join. Remember that all-important Right Question?

What is my product?

Whenever you are considering joining a MLM (or any associate program, for that matter, although the risk is less because you do not receive any profits from referring others into the program), be very certain just what product you will be selling. If you don't have a product, you don't have a business. You have a scam.

Insist on clear information on exactly what your product is and does. Is it something substantial, or some flimsy excuse, just barely enough to qualify the program as a business and not a pyramid scheme? Do some research of your own, whether via the Internet or paper publications, on the company. If you're in doubt, buy a sample for yourself before selling it to others.

Find out just how much you will be expected to pay to get into the system. Large start-up expenses are a warning sign, especially if they consist of "training fees" or "administrative costs" instead of providing inventory for you to sell. Such "fees" often go straight into the pockets of the organizers. Your "training" may turn out to be a 20-minute videotape rehashing tried-and-true sales techniques you can learn for free at the local library.

Pay attention to how the business is operated and promoted. Is there an excessive emphasis on adulation of founders or other corporate leaders? Is there an emphasis on high-energy rallies or training activities in which rational thought is subordinated to emotional reaction?

Is deception used or encouraged in sales or recruiting? At least one well-known MLM encourages its distributors to avoid using the company's name until one has achieved a rapport with the prospective customer or referral.

Are you encouraged to sell in social situations (like "parties") where people may feel obligated to buy products they neither want nor need?

In general, if you feel that a program is dishonest or just "too good to be true," stay away. And if you discover unexpected aspects of a seemingly-honest program after you enter, drop it immediately. If they're dishonest with you, they'll probably encourage you to be dishonest with your customers.

It is possible to avoid scams without having to avoid working at home altogether, if you keep your eyes open and your wits about you. Be wary of any program that promises huge returns for very little effort, or refuses to answer your questions about their company history or that of its founders.

Learn more about avoiding scams:

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This page last updated May 14, 1999

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