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Avoiding Home Business Scams

by Art Sprague, Art Sprague Consulting - We create websites and business promotions.

Starting a home business is a dream for many people. The idea of spending more time together or with the kids is an attractive dream. Modern technology has made the capability of being able to work from home an even more possible. Working from home gives people more opportunities to create their own hours and work around other family schedules such as school and taking care of aging parents.

Before you invest you need to research the options. The internet is a global community and there are many people who have developed elaborate schemes to get people who are following their dreams to part with their money. You need to take the appropriate steps to research the opportunity and the company. Don't be a victim of these people.

These steps will help you get started researching business opportunities and avoiding the scams:

  • Pick something you are passionate about Don't invest in any opportunity that you are not interested in or that you feel pressured into investing in. Working in a business that you are passionate about will be more fun and more profitable.

  • Research the company Check them out with the Better Business Bureau (http://search.bbb.org/search.html) located in their city. If they are incorporated find out what state and research that states website looking for any litigation. Do searches on their name and their type of business offer for feedback from others.

  • Find other customers I am not suggesting that you ask for references. References can be bought. If they are selling an online business find people who are in the business. There are very few business opportunities that will not have an online presence. Ask the company to point some of those people out. Talk to them, but do additional research. Ask each person about their experience with the company.

  • Is the company involved? What this means is does the company have a members forum where their customers can share ideas? In the computer field these are called users groups. If the company is legit they will have no problem with their customers sharing ideas.

  • Avoid companies that ask for money up front. If they want money before giving you any real information about the business you should be very concerned. They should be able to share enough information with you that you can know if it is worth an investment to learn more.

  • Overnight Riches Don't Happen Ads claiming you can make large amounts of money in short periods of time are usually scams. If it was that easy they would be doing it and not selling you the information. You should also be cautious if the company is doing a lot of "immediate decision" pushes. If it sounds too good to be true, it usually is.

  • Research the Company Get specific information in writing from the company such as how long they have been in business, where they are located (not just a P.O. Box), how many customers they have, what their refund policy is (read it thoroughly); how long it takes to get paid and if there are any restrictions on payments, etc.

  • Pay with a Credit Card If you do make the decision to invest use your credit card instead of cash. Do not use PayPal! It is often easier to dispute the charges with your credit card company. PayPal is worthless for disputes.

  • Use the Internet for Research There are many online sites which can help you research a company. One popular site is http://www.scambusters.com.

  • Be proactive if scammed If you get scammed you have learned a lesson. Be proactive to get your money back from the company and report scams to the states where the company resides as well as the Federal Trade Commission http://www.ftc.gov If they actually do business in your state report them to your own state authorities. Your goal is to bring pressure on the company and help others not be scammed. There is

    Another place to report is the National Fraud Information Center, PO Box 65868, Washington, DC 20035, (800) 876-7060. http://www.fraud.org.

 

Here are some common business scams:

Where did you get the offer?

Did the offer come in the mail, email, or posted somewhere? If so, be very wary of the offer. Most of these are scams ready to take advantage of you. If you saw the ad in a newspaper, jobs or business opportunity magazine, or on professional website, then it may be legit. Use the criteria above when looking at the offer.

Common Home of Business Startup Scams:

Envelope Stuffing - This is one of the most established work-at-home scams and one of the oldest. Basically, once you pay your money and sign up to work from home, you're sent a set of envelopes and ads just like the one you responded to. You might make some money if someone responds to your ad, but eventually there just won't be a market for it any more. Not only are they deceptive the are illegal in most states.

Charging for Supplies - The practice of charging for supplies does not make it a scam. However, consider it as a red flag. Depending upon the business offer there may be a need for specific supplies. In addition, this may be part of how the people who are brining you the offer will make their money. Consider it to be a similar arrangement to a franchise where you are required to use their products.

If you are required to purchase a starter kit get a good luck at what you are buying. Some scams will require a small 'investment' for whatever materials would be needed to do the work - and then you'll be sent very shoddy materials that aren't worth anything like what you paid, and you'll probably find that there's no market for the work anyway.

Working for Free - You may be asked to work at home making clothes, ornaments or toys. Everything seems legitimate - you've got the materials without paying out any money, and you're doing the work. Unfortunately, when you send the work back, the company will tell you that it didn't meet their 'quality standards', and will refuse to pay. Then they'll sell on what you made at a profit, and move on to the next sucker.

Home Typing, Medical Billing, and Similar Businesses - There are lots of work-from-home scams that involve persuading you that some industry has more work than it can handle, and so has to outsource to people working from home. For example, you might be told that you'd be typing legal documents, or entering medical bills into an electronic database. These scams have one thing in common: they all say that all you need is your computer, and will need to purchase some 'special software'.

This software might appear to be from a completely unrelated company, but don't be fooled - the whole reason the 'work-from-home' ad was there to begin with was simply as cynical marketing for the software.

About the Author

Art Sprague is president of the Sprague Company LLC
Their website www.artsprague.com is a business portal for small companies looking for promotion ideas and inexpensive website solutions.