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Front Page » December 18, 2008 » Business journal » Homework...What every prospect should know
Published 2,190 days ago

Homework...What every prospect should know


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By RICHARD SHAW
Sun Advocate publisher

Times are tough. Job losses and possible job losses in todays economy are real. People are scared and are looking for better, more secure ways to make a living.

It is the perfect time for home based business scammers. All the elements are there.

In times of prosperity they flourish, but in the days of recession, especially the one going on now, they grow 10 fold.

Home-based businesses advertised on television, in newspapers and magazines and even on the internet are not always scams; but many are. In fact when it comes to web based fraud, offers for home based businesses are near the top of the list.

With all the failures and scams going on on Wall Street and in the banking industry, with legitimate businesses, how can one discern a good business idea from a bad one?

Mostly common sense.

The old adage says if it is too good to believe, it probably is not true. That is the philosophy people who are thinking about a home based business should consider.

Home-based business scams are always appealing. They say things like "Fire the boss, be your own boss" or "I made $5000 in one day."

They also always appeal to people's sense of being able to "stay at home" making it look like home-based businesses are something you can do in your spare time, sitting at the kitchen table.

But making money fast seems to be their biggest attraction. And that is what makes them so successful (for the scammers). They particularly appeal to those that can't find work, those that are sick or disabled or those that are often too old to hold down a regular job. They also appeal to someone who may have a job, but wants out of their present employment in the worst way.

These kinds of scams also appeal to those that are caught in what many professionals in the world of social services call "the cycle of poverty." They appeal to these people because many are single parents without an education or the skills to work in jobs that pay well. The scammers present a world of wealth opening up to these people without them having to go through the steps of growth (education, skill development, time spent working in the trenches of the workplace).

While there are many variations on the theme, there are two basic types of scamming businesses with many variations on the theme.

The first is a business offer to assist a person to start a home-based business marketing over the internet or by having the home based business operator bring new people into the business with cash to invest.

These kinds of businesses can be "supplying services" such as mystery shopping, network marketing through the internet or through personal networks of family or friends, or both and investment schemes.

Many scammers put on a big show to attract people to these kinds of offers. They produce friendly and elaborate television commercials, or in person drive expensive cars, wear high priced jewelry and dress with clothes from top of the line manufacturers. They supply testimonials from people who seem just like the people they are appealing to, making the scam seem that much more plausible.

The second type of business scam often involves doing work at home for some company. This can include everything from calling people, to writing letters to assembling something. While there are many companies that allow employees to telecommute, they are not home based businesses, but legitimate employees. People who do this often have gained the respect and trust of a company through years of labor and or association. People look at the home based journalist, or the consultant who travels and works from their home office and sees a world they want. But to reach that it takes a lot more than just answering an ad in a paper or a posting on the internet.

Here are some of the most prolific scams, the ones that appear often and the ones people fall for.

•Network or multi-level marketing.

While there are legitimate businesses that use this kind of management/marketing approach, there are many that use it just as a way of generating cash flow for a chosen few.

The basis of the scams is not to sell products, but to bring new people into the system that will benefit those who recruited them, thus benefiting everyone up the line. A key to watching these kinds of pyramid marketing ploys is that the thrust of the sales presentation begins with some service or product, but always ends with recruiting friends, business associates and others into the program. Fees are often charged to get started and a minimum of product or service materials must be purchased.

The problem is that individuals who get caught up in these kinds of organizations can become part of the scam and are often liable if charges are filed.

They will also sometimes compare themselves with legitimate multi-level businesses, saying that while those are established "you have the chance to get in on the ground floor" of such an endeavor that will become as successful as companies like Amway or Nuskin.

•Typing at home, stuffing envelopes, processing mail, etc. These types of scams have been around since people started sending mail.

There are many scams of this type, all designed to promise you easy work in the comfort of your home with you only doing a little of the effort to make good money. Often the pay is supposed to come through a piece rate; for instance you get a dollar for each envelope you stuff and mail. All you have to do is send a certain amount of money to get started and the work will start arriving right at your door.

After sending in your money a person usually receives a book on how to make money with some copied letters you can send out to make money the same way they did. In other words what you are stuffing envelopes for is yourself to get money from people so you can send them the book and they can do the same thing.

Since something comes from sending the money, to some people this seems legal. But legal or not it certainly is not moral.

•Health related billing businesses. The business of health care and medical practice is a huge part of the economy in this country, and it continues to grow. Like any growth business, scams pop up when things get attractive.

The idea is that you can start a business processing medical billings with the right equipment, software and of course contacts. There is a fee, often of hundreds of dollars, to buy what is needed to get into the business. The scammers also often promise to send a list of companies that hire home-based medical billing processors.

Sounds easy doesn't it. But the fact is that most health companies, whether they be hospitals, insurance companies or even individual doctors, either do the billing themselves or they hire well known firms to do it.

One more thing. Medical billing is not as simple as it looks. People who run companies doing this and their employees need high levels of training before they can be successful at it.

•Assembly of dolls, toys or craft items. The first question to ask yourself is why anyone would want to pay you to make a few crafts at home, while paying you for them when they can have these same items made in a foreign country so much cheaper.

But that is not the only question. An ad for this kind of home based business will usually require you to buy the materials, a kit, or tools to make these items. The money up front that you spend will be the only money you see when you delve into this scam.

While the company says they will buy the completed items from you, when you send them in for your payment they will find a reason not to pay you for your work, usually that the workmanship is inferior and does not meet their criteria.

Then all you can do is take them to the flea market and hope someone buys them.

•The "unknown" business model. This business model is popular with scammers; they don't even tell you in their initial ads what you will be selling, making or marketing. One ad plays on cable and satellite television, uses a mascot and has people sitting around their pools, on the beach, at a ski resort and various other places telling you how they made $10,000 their first week or $20,000 just yesterday.

Problem is that none of these people exist and once you get roped into contacting them there is a lot of pressure and call backs on trying to get you to invest in the business. In some of these scams money is all that is mentioned, with very little substance behind it.

•The consulting scam. Legitimate consultants usually have a field of skill that is particular to some business or endeavor. They usually have years of experience doing something that other people either don't know how to do, they have a proven way of doing things that helps companies that hire them or they have a special body of knowledge that allows them to charge a lot of money for their information and time.

Then how can people think they can take a class from some unknown person and become a consultant to large companies?

This is exactly what happens. Ads are often pretty much up front. They say "Become a consultant and make big bucks" or something like that. And they say all you have to do is take a day long seminar from Dr. John Doe and he will teach you all the basics to become a successful consultant. The classes usually cost between several hundred dollars and several thousand. But they also tell you that companies will pay you thousands of dollars a day to work for them, generally from home.

But the question is that if Dr. Doe is so good at what he teaches, why don't these companies just send one of their employees to the seminar and learn it so they don't have to pay those high fees?

And what can Dr. Doe possibly teach you in one day what these companies will pay thousands of dollars for?

Simple and commonsense, yet the scam seminar business does everything from hawk ideas to travel opportunities and make billions of dollars a year at it.

It's hard to believe that people would be taken by these kinds of scams, because there is little mention of how money is made, but investing in these kinds of "businesses" means you are usually divesting your savings.

There are many others that are variations on the above scams. Some offer to pay you for processing emails (who would pay anyone to do that), others are just a knockoff of the typing at home by using your computer.

Finally there are the scams that just take your money by you making a phone, and that is all. You don't even get to say anything or ask a question. Home based business opportunities offered through 1-900 numbers are probably the biggest scam of all. That's because you are paying big bucks to be on the phone and often these crooks will put you on hold through an automated voice answering service until you finally hang up. All the time you are sitting there to find out about their great offer, you are paying, which is how they make their money.

Business opportunities are everywhere; some are legitimate, many others are not. In this day and age it is hard to count on anything or anyone that you don't have personal knowledge of, particularly across the Internet.

If interested in one, it is best to just check, check and recheck it's legitimacy. Don't be caught up in the frenzy to be the first to get in.

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December 18, 2008
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