Ads that promise easy money often lead to big debt instead
By Kenneth Terrell, AARP
Opportunities that promise quick money working from home frequently lead to quick money for someone other than you.
The ads made it sound like a great way to make money. All you had to do was post online ads for various products and services that another company would deliver. Plus, workers could earn as much as $58,500 a year working for just an hour a day in their own home.
But like so many other opportunities that promise you can boost your income by working at home, the jobs offered by Internet Teaching and Training Specialists (ITT) turned out to be a scam. When interested people called the number in ITT’s ad hoping to make money, they instead were asked to spend as much as $15,800 to sign up for a Business Coaching Program that, in the end, did not help them launch profitable businesses. Earlier this year, ITT settled charges the Federal Trade Commission (FTC) brought against it for potentially as much as $10.2 million.
“The best way to protect yourself from illegal schemes is to learn about how to spot them,” says Rosario Mendez, an attorney in the FTC’s Division of Consumer and Business Education.
Identifying work-from-home scams can be tricky, especially when advertisements for such jobs appear on the internet and lead to websites that look professional. But few of these opportunities ever lead to real income and many of them leave people with debt, according to the FTC and the Better Business Bureau. Experts at both groups cited the following as some of the most common work-at-home scams.
1) Start your own internet business: ITT’s case is just one example of scams that promise you can earn good money starting your own online company. But instead of spending money actually getting a business started, you’re more likely to end up paying thousands for coaching and training. Many of the people who pay for this support end up with debt rather than a profit.
2) Another common work-at-home business scam promises that you can make money doing internet searches and then filling out forms telling what you found. In most cases, the scammers are trying to get your credit card information, which they ask for to pay a shipping and handling fee to get started. Once they have your credit card number, they try to put additional charges on it.
3) Medical billing: If you’ve been to a doctor’s or dentist’s office, you know that filling out insurance forms and then making sense of the billing process can take some time and effort. So when want ads say doctors and dentists need help getting these forms processed, it might seem like a natural work-from-home opportunity — especially when the ad says no experience necessary. Unfortunately, these scams can cost you a lot of money up-front — as much as $8,000 — to receive all of the equipment, training and technical support you’re told you will need to get started. In most cases, that investment doesn’t pay off. The lists of doctors you’ll be given as potential clients are either outdated or not in need of billing assistance. And the technical support and other assistance you thought you would get when signing up also don’t materialize.
4) Envelope stuffing: One work-at-home scam that has been around for years says you can earn money by stuffing envelopes for a company. Typically, people who respond to an ad like this are asked to pay a small fee — usually between $15 to $40 — to get the materials to start. The problem is that once you pay the fee, all you’re likely to get — if you receive anything at all — are instructions on how to place a similar want ad so you can trick others into paying a start-up fee like you did. Not only can this scam cost you money, but also in some cases placing a want ad like this can even be illegal.
5) Another similar scam promises that you can make money by typing, entering data or doing other clerical work from home — once you pay a small fee to get started. Real clerical outsourcing firms will not ask you to pay such a fee.
6) Assembling crafts or products: This scam is another one that has been around for years. The ad typically says that a company needs help putting together products or finishing craft. You work at your own pace and the company says it will buy the items as soon as you finish. But you have to spend your own money to buy the materials and equipment — sometimes from the company — to make things like aprons or plastic signs. After you’ve spent hours making the items, the company refuses to pay you for them because it says they’re not good enough. The scammers make money off of what you spent to get started, and all you get is a bunch of useless products you can’t sell.
Before pursuing any work-at-home job — no matter whether you saw the ad online or in your local newspaper — do your research to find out whether the opportunity is legitimate, especially if you’re asked to pay a fee, purchase equipment or provide your credit card number to get started. Among the key questions for which you should get answers in writing are:
A. What is the total cost to get started doing this work-at-home job, including supplies, equipment and any other fees? What exactly will I get for this money? If there’s a training process, how long will it take and how many steps are required?
B. What tasks will I have to do to get paid? And will I be paid a salary or commission?
C. Who will pay me and when will I get my first paycheck?
D. On what are claims about how much I can make based? What can prove that others have earned that much money? Under FTC policy, if a company makes a claim about how much money you can earn working at home after buying their start-up materials, the company also has to give you an earnings claim statement with more specifics.
In addition to asking the company those questions directly, you should research the company online to learn whether it has had any complaints or lawsuits filed against it.
Good places to start are state’s attorneys general and the Better Business Bureau, for both the state you live in and the one where the company is based. Be on guard even if you don’t find complaints. Companies can settle claims out of court or change their name or location, making it harder to find evidence of any of their previous troubles.
If you believe you have been exploited by a work-at-home job scam, you can file a complaint with the FTC at ftc.gov/complaint or 877-FTC-HELP (877-382-4357), or with your state’s attorney general.