The ability to work from home is an attractive proposition, especially when a company promises high income for little effort. But Better Business Bureau advises consumers to be careful about accepting these offers.
BBB received over 1,800 complaints about work-at-home businesses in 2012. The majority of consumer complaints alleged companies required them to pay up front for work-at-home opportunities and were promised income that never materialized.
Work-at-home schemes have been around for a long time. Traditional schemes such as envelope-stuffing are still around. A consumer recently forwarded to BBB a pay-upfront offer from Preston Lord Enterprises aka Maxwell Gates Enterprises, which was sued in 2011 by the New Jersey Attorney General. The lawsuit was part of “Operation Empty Promises,” a nationwide crackdown against work-at-home scams.
Digital age work-at-home scams are now commonly reported by consumers who respond to offers found on the Web or receive offers after signing up on job-hunting sites.
The Federal Bureau of Investigation warns that involvement in work-at-home schemes can make a consumer vulnerable to identity theft or unknowing involvement in criminal activity. The FBI breaks work-at-home scams down into the following basic categories:
• Advance-fee. Consumers are asked to invest money up front to pay for inventory, set-up or training materials. When the materials arrive and turn out to be worthless, the consumer is stuck with the bill.
• Counterfeit check “mystery shopper.” The consumer is sent a check and asked to deposit the funds, withdraw money to shop in local stores and wire part of the money to the employer, keeping a percentage. When the check turns out to be bogus, the consumer is left on the hook for the full amount.
• Pyramid schemes. The consumer is hired as a distributor and must pay large amounts for promotional materials and products such as pamphlets with little value. The consumer is promised income from recruiting more distributors. When the scheme falls apart, the only ones to make money are those who started the pyramid.
• International go-between. Criminals, often located overseas, sometimes involve unknowing victims to help them steal, launder money and remain anonymous. A criminal may offer to hire the consumer as a U.S.-based agent to receive and re-ship checks, merchandise and offers to other potential victims.
Austin-area resident Carolyn Reininger was excited when she was contacted after signing up online for work-at-home opportunities. It wasn’t long before her excitement turned to frustration and disappointment. The company offered to help her start a small credit-card processing business—for a fee.
Reininger paid $5,495 and was told the company would get her started by developing a list of businesses that needed third-party credit card processing. “They were supposed to work your leads,” she said. “They were going to work them and then give you the first 1,000 leads. They would get it started, help get your company established. The leads would help you contact companies that wanted this service.”
After Reininger noticed the company no longer seemed to be gathering leads, she began to call with questions and either got no response, or was encouraged to spend more money.
Reininger said she got a call from someone she said was touted as an expert who told her he could make anyone into a millionaire. “He wanted me to spend more money. I didn’t want to. He got kind of belligerent and then I never heard from them again.”
Perry Bird of Round Rock paid over $2,000 for a website advertising diet and nutrition products. He was told he would receive money for advertising based on traffic to the site. He said the income did not materialize and the company would not honor a promise to refund his money if he cancelled within 30 days.
Bird said after he bought the website, he could not get through to anyone with the company. “At first they wouldn’t take my calls,” he said. “Now they won’t answer the phone at all. They got $2,250 from me. I’m on a fixed income on Social Security Disability.”
Bird said after he sent his second payment via bank draft, he had second thoughts and the next day sent certified letters to two Phoenix, Arizona addresses saying he wanted to cancel. The letters were not accepted. “They said I could cancel within three days,” he said.
Before signing up for any work-at-home opportunity, BBB advises job hunters to:
• Start with trust. Check out any company at bbb.org to view their BBB Business Review free of charge. There you will find the company’s history of complaints and contact information. For a list of accredited businesses, go to checkbbb.org.
• Be skeptical. Beware of any offer that guarantees a lot of money for little effort and no experience. Thoroughly read the website’s terms and conditions, keeping in mind that a free trial could cost you in the end.
• Don’t be fooled by affiliation claims. Be wary of work-at-home offers that use logos from Google, Twitter or other popular online sites. Just because Google is in the name doesn’t mean the business is affiliated with Google.
• Check the domain. Research the website with Whois.net or a similar site for determining domain name ownership. Be cautious if the site is anonymous or individually registered.
• Beware of unexpected offers. If you receive a job offer without filling out an application, meeting with the business or being interviewed, it is probably a scam.
• Don’t pay up front. Being asked to make an advance payment to get on the ground floor of a big opportunity is a red flag, especially if it is a large payment or the company doesn’t provide much information about the deal. Handing your Social Security number or other personal information to suspicious sources could lead to identity theft.
• Don’t wire money. Being asked to wire money is a red flag. Scam artists often ask you to wire payments because they know you won’t be able to get the money back.
Update 5/24/13: BBB just learned of a scam involving bogus checks and wire transfers that serves as a perfect example of what can happen when you take a chance on a work-at-home scheme.