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Beware of Scammers! 12 Work from Home Schemes to Avoid
There are always people trying to scam you out of your hard earned dollars. They target the desparate, the unemployed, the undereducated, the frustrated, the burned out, the elderly, the unwary and those just trying to make a little extra in their spare time.
There are often very obvious indications a work from home scheme is fake – the promise of incredible amounts of money for simple work, advertisements posted in the comments section of articles or in forums, even dodgy hand-written signs posted on bulletin boards or the side of the road.
However, more organised and clever scammers will advertise in legitimate newspapers and magazines, job search websites. You might get a cold call out of the blue asking if you’d like the opportunity to earn more money in your spare time. Even family and friends can be unwitting participants, sending you fraudulent emails or letters, or inviting you to join them in what turns out to be a pyramid scheme.
Common work-from-home scams
- Envelope Stuffing – this scam promises to pay you a dollar or two for every envelope you stuff, 1,000 envelopes a week guaranteed! When you respond to the advertisement and pay a small fee for an “information kit”, you won’t actually get a job stuffing envelopes. You’ll be told to place the same advertisement that you responded to and send it to other people (at your own expense) in the hopes they will be scammed too and send you money for an info kit. This is a classic example of a pyramid scheme.
- Email Processors – this is the online version of Envelope Stuffing. You’ll pay for the info kit and then be told to send the same ad out to other people via email or newsletter.
- Home Typists/Order Taker/Application Taker – these are a variation of the “email processor” scam, offering you home typing work but requiring you to pay an upfront fee. There are real home typist jobs but you would never be asked for a fee and they’d rarely be advertised online on forums, banner ads, Facebook and similar mediums.
- Chain letters – all you have to do is send money to everyone on the list, add your own name to the list and send copies of the letter to as many people as you can. The letter promises that by doing this, you’ll be sent a lot of money in turn. This is simply a pyramid scheme (and illegal), the only people who make any money are those who start it.
- Mystery Shopping – mystery shopper scams involve you responding to an advertisement by sending a resume to an overseas address e-mail. When you’re “hired”, you’ll be sent traveller’s cheques which you’re supposed to cash, take a percentage for yourself as payment, and then forward the rest overseas. The cheques are fake and bounce after you forward the payment overseas, leaving you on the hook for the fake cheque. There will often be pressure to complete the assignment within a short period of time, 24-48 hours. There are real mystery shopper jobs but they rarely pay much more than minimum wage and are hard work as well.
- Lists of “sure-bet” work from home employers – you’ll pay for a list of companies looking for home workers just like you. The problem is the list is usually made up of fake companies or companies that don’t offer work-from-home jobs. Sometimes it’s just a list of legitimate businesses copied out of the phonebook.
- Craft/Electronics Assembly – this scam offers to pay you to assemble products at home for a per-item rate (often very generous) and return them to the company. The kicker is you have to pay a fee for a “starter-kit” up front which can include training materials and parts. When you send back the first set of completed products, you’ll be told they don’t meet the (impossible) quality standards of the company. The company might still take the final product and sell it to a legitimate retailer for a fee, but their main revenue is from selling you the kit in the first place.
- Medical Billing – this scam offers to set you up to start your own medical billing service at home. For a modest upfront fee of several hundred or thousand dollars, you’ll get all the training, marketing materials, software and a list of clients you need to start your new business. Medical billing is actually a legitimate service, however most clinics handle their billing in-house or outsource to a proper firm, rarely to individuals. You’ll discover the client list is useless or your software doesn’t meet the specifications required to provide billing services. Good luck getting a refund!
- Get paid to read books – this works in the same way as the “sure-bet” list of work from home employers. You pay for a list of publishers looking for people to review manuscripts which are either fake or available freely online. There are real editing and proof reading jobs available that can be done from home, but they’re normally carefully and professionally advertised.
- Just call this “1900 XXX XXX” number – this one should be pretty obvious. In Australia, “1900” are tariff numbers that charge you $0.35-$5 per minute or $0.35 to $30 per call. When you ring for more information about the “job opportunity”, that’s when the scammers make their money.
- Multi-level Marketing (MLM) – some MLM schemes are legal (though subject to many criticisms) and it is possible to make money participating in them. However, when “climbing the ladder” and finding new recruits is more important than actually selling products or services, it’s more likely a pyramid scheme. You can lose all your money and be in legal trouble too!
- Website Owner/Operator – running a website can be a completely legitimate and profitable work from home business. In this situation, however, the scammers will offer to build you a website reselling generic products the scammer themselves will provide and ship to customers. You’ll likely be asked to pay them a fee upfront (which is usually how they make their money) leaving you with a useless website. There is often no mention (or at best some flimsy excuse) why the scammer simply doesn’t build and operate the website themselves.
They may not just be after your money directly. Work from home scams can also be designed to get hold of your bank account details or personal information. The scammers can then commit identity theft and apply for loans and credit cards under your name.
Simple Steps to Avoid Getting Scammed
Checklist to avoid scams:
- If it sounds too good to be true, it’s probably some kind of scam. “Earn $8000 a week working from home part time with no skills or experience”. If it was that easy, wouldn’t everyone be doing it?
- Don’t commit to anything upfront. Research the business. It will be hard if they’re trying to pressure sell you, but stand firm. Go away and look into the business before you sign anything or hand over money.
- Check their Australian Business Number or Australian Company Number to see if they’re a real business.
- Search for customers who’ve signed up with them before. Customers will often leave reviews on third-party websites or forums, especially if they’ve been scammed.
- Check for endorsements they advertise on their site or marketing materials. Professional associations often have a register of businesses they’ve endorsed and have restrictions on how and where their logo can be used.
- Check their phone number on reverse phone lookup sites. Other users will often leave comments to let you know if it was a scammer calling.
- Look up their website domain. You can often find the name and contact details of the person of the person who registered the website domain. They might have changed business names and started a new scam, but researching the person behind the business can reveal past scams they’ve pulled.
- Scammers keep using the same scams because they keep working. Educate yourself. “Ponzi” or pyramid schemes were described as far back as 1844 by Charles Dickens’ in his novel Martin Chuzzlewit. “Envelope stuffing” schemes started in the 1920s and 1930s in the United States. There are always new variations on the classic scams popping up, but when you learn the basic principles of common scams, it’s easier to spot them when you run into them.
- If there is a “startup fee” it’s probably a scam. Would a legitimate employer charge you money to start working for them? If they want money for training, instruction or “registration” it’s a good indication something is wrong.
- Money-back guarantees sound good but are worth nothing. Try typing “money back guarantee”. How long did that take? That’s how much it’s worth. The old saying “possession is nine tenths of the law” is exactly true. Once they have your money you’re never going to see it again. Keep your money in your pocket..
- Talk to your friends and family. When you want something to be true, you can convince yourself it is even if there is strong evidence it’s a scam. Getting second and third opinions from people you know will help you take off the blinders and see the scam underneath the “amazing” opportunity.
- Contact SCAMwatch. The Australian Competition and Consumer Commission runs the “SCAMwatch” website and has a team dedicated to providing information about scams. If you think an opportunity is suspicious and could be a scam, get in touch with them. They may be able to help you with research or might already have identified the work from home job as a scam.
If you’re looking for genuine opportunities, check out our Big List of *Real* Work from Home Jobs. There’s no “get rich quick” schemes, just real work and jobs people can do from home.
If you want to learn more about the realities of working from home, try The Great Big Guide to Working from Home.