Beware of work-at-home schemes

FORT WAYNE—Your BBB of Northern Indiana has received numerous calls from consumers stating that they have either been contacting work-at-home companies who advertise in the paper, or have been receiving information in the mail about work-at-home opportunities. Two of those work-athomes have been stuffing envelopes, assembly, or not listed as a particular type of business.

The holidays are coming up and many consumers are looking for a supplemental income. These companies will prey on people wanting to make quick money or work from the convenience of their homes. Here are tips from your BBB of Northern Indiana. Before sending any money or giving any credit card, bank account number or other personal information, call your BBB. Here are a few of the workat- home companies consumers have called us about today:

• DLR Sales in Tennessee.
• American Financial Publications in Missouri.
• Midland Marketing in Tennessee.
• HBG Publications in California.

Some of the most common scams are:

ASSEMBLY WORK AT HOME: Typical Ad—“Assembly work at home! Easy money assembling craft items. No experience necessary.”

This scheme requires you to invest hundreds of dollars in instructions and materials and many hours of your time to produce items such as 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 often decides not to pay you because your work does not meet certain “standards.” You are then left with merchandise that is difficult or impossible to sell.

ENVELOPE STUFFING: Typical Ad—“$350 Weekly Guaranteed! Work two hours daily at home stuffing envelopes.”

When answering such ads, you might 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 envelope ad plan might 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.”

MULTI-LEVEL MARKETING: Typical Ad—“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 relax and enjoy your affluent lifestyle! No experience necessary.”

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 recruit other distributors to join them. On the other hand, illegitimate pyramid schemes can resemble these legitimate direct sales systems. An 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.

ONLINE BUSINESS: Typical Ad—“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 email— an old scheme advertised in a new way. You pay for a useless guide to work-at-home jobs—a mixture of computer-related work such as word processing or data entry and the same old envelopestuffing and home crafts scams. The computer disk is as worthless as the guidebook. It might only list free government websites and/or business opportunities which require more money.

PROCESSING MEDICAL INSURANCE CLAIMS: Typical Ad—“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 percent of providers need your services. Learn how in one day!”

Generally, 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 might 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 or nonexistent. The promoter might delay the processing of your job, citing a backlog or mistakes in your work. There might also be no central computer as advertised. You might be left with no way to deliver what you have promised to your clients or customers—if you found any—and with no way to earn any money on you own.

Avoiding Fraud There is no substitute for closely examining any offer which promises or guarantees income from work-at-home programs. If it sounds too good to be true, chances are it’s a scam.

Consider it a warning sign if a worker must buy something to start the program. Those interested also should take into consideration that, by becoming involved in a work-athome scheme, they might well be perpetrating a fraud by selling the program to others, and risk investigation by postal authorities.

Work-at-Home Scamers:

• Never offer you regular salaried employment.
• Promise you huge profits and big part-time earnings.
• Use personal testimonials but never identify the person so that you could check with them.
• Require money for instructions or merchandise before telling you how the plan operates.
• Assure you of guaranteed markets and a huge demand for your handiwork.
• Tell you that no experience is necessary.
• Take your money and give you little or nothing in return except heartbreak and grief.

For a reliability report on a specific work-at-home company, check first with your local Better Business Bureau office or go to www.bbb.org.

This is part of the December 10, 2008 online edition of Frost Illustrated.

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