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Work-At-Home Schemes

Working-At-Home: A Growing Trend
Working-At-Home: The Perpetual Schemes
Working-At-Home Schemes Alert!
Where Schemes Appear
Processing Medical Insurance Claims
On-Line Schemes
Mail-Order Scams
Envelope Stuffing Schemes
Assembly Work At Home
Multi-Level Marketing Distributorships (Direct Sales)
Chain Letters
Steps To Take Before You Sign Up
Do Your Homework and Your Own Research
Tips to Remember

Working-At-Home: A Growing Trend

If you want to work at home, you have reason to be optimistic. There is a rapidly growing work force of government or corporate professionals who work at home one or more days a week. Other people are operating their own successful businesses out of their home offices. Computer technology and ease of communication makes this possible. More and more people are enjoying new opportunities to cut back on commuting time, stay in closer contact with their families, or simply enjoy the independence of working on their own.

Those who succeed by working at home have several things in common: They have training or experience in what they are doing; they work hard and efficiently; they work for a salary; or they spend time and money developing the market for their work. They have not stumbled onto a magic formula for getting rich quick. Even in this new world of telecommuting, the same old rule applies; to be successful, you must work hard and work smart.

Working-At-Home: The Perpetual Schemes

If you want to work at home, you also have reason to be cautious. Many people are victimized by work-at-home schemes, and they are losing more money than ever. The old schemes in which a consumer can lose ten or twenty dollars are still around, but now there are new schemes that rob their victims of thousands of dollars.

Work-at-home scam artists have always preyed on senior citizens, the disabled, mothers who want to stay home with their children, and people with low incomes and few job skills. These days they also target poeple with computer skills and higher incomes. They use technical terminology and new ways of reaching people, such as the Internet or cable television, but they deliver the same old false promise: "You can make big money with little effort!"

Work-at-home businesses consistently generate the most inquiries received by the Better Business Bureaus. Of complaints received on the Better Business Bureaus on-line complaint service, 20% relate to work-at-home schemes or business opportunity on-line promotions.

If you are tempted by work-at-home promotions offering "easy money," remember -- you have a lot at stake. You can:

• Lose Money. Consumers have lost amounts ranging from $10 to $70,000, or more.
• Damage your reputation. You may find you have unintentionally sold your customers bad or nonexistent products or services.
• Risk becoming the focus of a legal investigation. You may be held responsible if you perpetrate a fraud by promoting and selling a fraudulent product or service to others.
• Lose valuable time. You may expend a lot of effort on a work-at-home scheme which gives you nothing in return.

Working-At-Home Schemes Alert!

Be skeptical about work-at-home promotions that state:

• You can earn big money with little effort. "Earn hundreds in your spare time!"
• No experience necessary. "Our people have come from all walks of life and have succeeded with no special training!"
• The market for your work already exists. "This huge untapped market is waiting for you!"
• You need to invest only an insignificant amount of money for training or materials. "Only $29.95 will bring you thousands in earning power!"
• You will not be paid a regular salary. "Profits will start rolling in with your first completed item!"
• Don't wait to make your decision. "Save money by making your decision today! Popular demand will force us to raise our rates soon!"
• Many others just like you have succeeded. "I was a failure until this offer changed my life!"
• You are especially privleged to learn about this opportunity. "This valuable information has not been shared with the general public before!"

Where Schemes Appear

New variations are continually appearing in:

• Popular magazines
• Business journals
• Tabloid newspapers
• Classified ads
• Hand-distributed flyers
• Direct mail solicitations
• Telephone solicitations
• The Internet
• Cable television infomercials
• Business opportunity trade shows

You may have seen advertisements for work-at-home schemes similar to the following examples. What all of these advertisements have in common is the promise of quick and easy money.

Processing Medical Insurance Claims

"You can earn from $800 to $1000 weekly processing insurance claims on your home computer for health care professionals such as doctors, dentists chiropractors, and podiatrists. Over 80% of providers need your services. Learn how in one day!"

Typically, the promoter of this scheme attracts you by advertising on cable television and, perhaps by inviting you to a business opportunity trade show at a hotel or convention center. You may be:

• Urged to buy software programs and even computers at exorbitant prices; a program selling at a software store for $69 might cost you several thousands of dollars.
• Told that your work will be coordinated with insurance companies by a central computer.
• Required to pay for expensive training sessions available at a "current special rate" that will be higher in the future, and
• Pressured to make a decision immediately.

Most likely, the expensive training sessions are superficial, and the market for your services is very small. In one case, for example, the Federal Trade Commission found that the market was exactly the reverse of what was promised--instead of 80 percent, only 20 percent of the health care professionals in a given area did not have their own computerized systems.

The promoter als o may delay the processing of your work, citing heavy usage or mistakes in your work. There may be no central computer. You may be left with no way to deliver what you have promised your customers, if you found any, and no way to earn any money.

On-Line Schemes

"Turn Your Home Computer into a Cash Machine! Get computer diskette FREE! Huge Selection of Jobs! No experience needed! Start earning money in days! Many companies want to expand, but don't want to pay for office space. You save them money by working in the comfort of your home."

This is typical of advertisements showing up uninvited in your e-mail -- an old scheme advertised in a new way. You pay for a useless guide to work-at-home schemes -- a mixture of computer-related work such as word processing or data entry and the same old envelope-stuffing and home crafts scams. The computer disk is as worthless as the guidebook. It may list government web sites and business opportunities, many of which require more money.

Mail-Order Scams

"These proven mail-order money makers can make you an overnight success in the growing mail order business. You have the ability to earn cash profits daily while you relax. Outstanding new plan for beginners requires a toke investment and no previous experience. The perfect home business!"

Most new business ventures are risky, and the mail-order business is no exception. Even the most successful mail-order promoters are likely to have experienced failures along with their successes.

No one can reasonably promise that you can make quick and easy money in the mail order business. Your "token investment" will bring you catalogs, instructions, and what purports to be mail order "secrets." And the promoter may supply you with shoddy products of little or no value to yourself or others.

Envelope Stuffing Schemes

"$356.00 Weekly Guaranteed. Work two hours daily at home stuffing envelopes. No experience needed!"

When answering such ads, you may not receive the expected envelopes for stuffing, but instead get promotional material asking for cash just for details on money-making plans. The details usually turn out to be instructions on how to go into the business of placing the same kind of ad the advertiser ran in the first place.

Pursuing the plans may require spending several hundred dollars more for advertising, postage, envelopes, and printing. This system feeds on continuous recruitment of people to offer the same plan. There are several variations on this type of scheme, all of which require the customer to spend money on advertising and materials.

According to the U.S. Postal Inspection Service, "In practically all businesses, envelope stuffing has become a highly mechanized operation using sophisticated mass mailing techniques and equipment which eliminates any profit potential for an individual doing this type of work at home. The Inspection Service knows of no work-at-home promotion that ever produces income as alleged." The Postal Inspection Service has put several of these work-at-home operations out of business through mail stop orders, consent agreements, or criminal proceedings.

Assembly Work At Home

"Assembly work at home! Earn $600 monthly assembling attractive craft items. Easy Money. No experience needed!"

"Home Sewing. Make money sewing beautiful gift items!"

These schemes require you to invest hundreds of dollars in instructions and materials and many hours of your time to produce items sucha s baby booties, toy clowns, and plastic signs for a company that has promised to buy them. Once you have purchased the supplies and have done the work, the company may decide not to pay you because your work does not meet certain "standards." You are left with merchandise that is difficult or impossible to sell.

Multi-Level Marketing Distributorships (Direct Sales)

"Our products make it possible for people like you to earn more than they ever have in their lives! Soon you can let others earn money for you while you and your family relas and enjoy your affluent lifestyle!"

Multi-level marketing, a direct sales system, is a well-established, legitimate form of business. Many people have successfully sold the products of reputable companies to their neighbors and co-workers. These people are independent distributors who sell popular products and also recruite other distributors to join them.

On the other hand, illegitmate pyramid schemes may resemble these legitimate direct sales systems. One obvious difference is that the emphasis is on recruiting others to join the program, not on selling the product. For a time, new recruits who make the investment to buy product samples keep money coming into the system, but very few products are sold. Sooner or later the people on the bottom are stuck with a saturated market, and they cannot make money by selling products or recruiting. When the whole system collapses, only a few people at the top have made money--and those at the bottom have lost their investment.

Chain Letters

"Dear Friend,

Would you like to easily make thousands of dollars for yourself and help others as you do so? I know from experience that it is is not only possible, but incredibly easy to do. Since I am successful leagal advisor, I have made certain this new method is legal. You simply mail one dollar to every person on the enclose list, remove the name from the top of the list and add yours to the bottom.

Make copies of this letter and send them to people whose names we will provide. All you have to do is send us ten dollars for our mailing list and labels. Look at the chart below and see how you will automatically receive thousands in cash return!!!"

The only people who benefit from chain letters are the mysterious few at the top of the chain who constantly change names, addresses, and post office boxes. They may attempt to intimidate you by threatening bad luck, or they try to impress you by describing themselves as successful professionals, knowledgeable about non-existent sections of allegedly legal codes.

Steps to Take Before You Sign Up:

Ask the company's representative the following questions. Remember, a reputable company will respect you for being careful and will not pressure you to make a fast decision.

• In what state is your company incorporated?
• What is the total cost of the program, including training, supplies, equipment, and special fees?
• Exactly what materials and support services will I receive for my investment?
• If I have products I cannot sell, will the company buy them back from me?
• Exactly what tasks will I be required to perform?
• When and how will I be paid--by salary, on commission, by the quantity of completed work?
• Who will pay me?
• Will I be responsible for finding my own customers?
• Exactly what are the required standards my work must meet?

Do your homework and your own research.

• Call your local Better Business Bureau or access the BBB's web site at http://www.bbb.org for a reliability report on the company.
• Find out what regulations apply to work-at-home offers in your state. Check with your state's office of attorney general or office of consumer affairs.
• Call the secretary of state's office where the company is headquartered to find out how long the company has been in business.
• Contact the Federal Trade Commission in Washington, D.C. or access the FTC's web site at http://www.ftc.gov for information.
• Call the U.S. Postal Service Criminial Investigations numbe for your region (listed in your local telephone directory) or call your local postmaster.
• Contact the Direct Sales Association or the Direct Marketing Association (both in Washington, D.C.) for further information.
• Consider doing further research at the public library. Talk to people in similar businesses that deal with the same type of products. You may also wish to consult an attorney who specializes in business law.

Before you sign a contact or spend any amount of money you cannot afford to lose, get all information in writing.

Read all of the contract's provisions carefully and make sure you clearly understand them. The Federal Trade Commission, under the Franchise Rule, requires that the sellars of some types of business opportunities must supply certain information in writing before a contract is signed.

Whether or not this law applies to your specific choice, you should insist on getting the following information in writing, signed by the company's authorized agent. After you obtain the written information, have it reviewed by an impartial person such as your attorney or an accoutant. Ask for:

• A copy of the company's financial statement.
• A list of all charges you are required to pay, including both start-up costs and any charges or obligations that may occur in the future.
• A detailed description of all assistance the company agrees to provide, such as training, materials and marketing.
• A description of any restrictions on what you may buy or sell, the market you will pursue, and any other aspect or your work.
• A list of others who have succeeded at this business opportunity. Ask for a substantial number of names (with addresses and telephone numbers) from which you can make your own choices of people to contact.
• An exact description of the conditions under which you or the compahy may alter or terminate the contract.
• Informatin on the business background of the owners and managers of the company, including any legal problems such as lawsuits.
• Written substantiation of the potential earnings the company has advertised. Find out what percentage of purchasers have earned the amounts claimed by the company.

Tips to Remember

If you become a victim of a work-at-home scheme, ask the company for a refund. They may be willing to give it to you. If they refuse to give you a refund, or if they give you an evasive response, tell them you plan to notify law enforcement officials.

Keep careful records of everything you do to recover your money. Document your phone calls, keep copies of all paperwork such as letters and receipts, and record all costs involved, including the time you spend.

If the company refuses to refund your investment, contact:

• Your local Better Business Bureau
• Your local or state consumer affairs agency.
• The attorney general's office in your state or in the state where the company is located.
• The U.S. Postal Service Criminal Investigations office for your region. They investigate fraudulent schemes, if the mails were involved.
• The advertising manager of the publication that ran the ad you answered.
• The Federal Trade Commission. While the FTC may not be able to resolve individual disputes, the agency can take action if there is evidence of a pattern of deceptive or unfair practices. To register a complaint, write to: Correspondence Branch, Federal Trade Commission, Washington, D.C. 20580

Copyright 1977, 1994, 1997 Council of Better Business Bureaus, Inc.
Council of Better Business Bureaus offers this copyright publication to the consumer as a public service on behalf of its members. It is not an endorsement of any kind.

Better Business Bureaus are not-for-profit organizations, serving the public interest by promoting ethical business practices in the marketplace.