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Working From Home Scams: How to Avoid Them

Author: Christopher Taylor

It's the kind of homespun wisdom that your grandmother probably first imparted to you at a tender age: if it sounds too good to be true, it probably is. It pays to remember such advice when you spot newspaper or online ads or emails that promote highly lucrative work-from-home employment.

Technology: A Double-Edged Sword

While the Internet has allowed employees in many professions to work from home rather than showing up at the office every day – the number is predicted to include 63 million Americans by 2016, according to Alpine Access, a large telecommuting company – it has also enabled a vast, largely unregulated labor and consumer marketplace. Many home-based workers are indeed making good salaries in both legitimate part-time and full-time jobs (see How To Make Money By Working From Home). Unfortunately, the Great Recession has also provided the perfect opportunity for hucksters, who prey on the economic desperation of the unemployed and underemployed. In 2010, the Federal Trade Commission (FTC), the United States' consumer protection agency, received more than 8,000 complaints regarding work-from-home opportunities. The number of those opportunities that were indeed above board? According to the FTC, fewer than 2%.

So how can you distinguish a true opportunity from an exploitative scam? Here are a few key strategies for avoiding job offers that sound amazing, but turn out to be deceptive. While some of these may indeed be highly profitable, the profits will always go to someone other than you.

Know the Common Scams

If you see a job advertisement that makes a mundane activity such as stuffing envelopes sound like amazingly lucrative profession, you know that a less-than-legitimate firm likely placed the ad. Other common scams include craft and assembly projects, medical billing systems, credit card processing machines and telemarketing resale propositions. And don't forget one of the classic cons: the Mystery Shopper scam, which usually promises you high fees for completing restaurant or store evaluations. Except that you have to pay a preemptive (and expensive) registration fee to participate.

For other examples, see Recognize And Avoid "Work At Home" Scams.

If you want to keep abreast of the latest trend in cons, the FTC is an excellent re. Its website publishes a current list of all types of scams – from health to mortgage to credit card schemes – including a separate page that alerts citizens to fraudulent businesses that promote home-based work opportunities.

Learn Preventive Measures

Many citizens don't know that the FTC enforces a protective measure called the Business Opportunity Rule. The Rule endeavors to safeguard would-be workers from potential scams by requiring a business to furnish a one-page disclosure statement, outlining necessary facts about the opportunity. What's more, any claims regarding profits or wages must be backed up by a separate document that provides specific details. For further information on the Rule, refer to the FTC's helpful page on Bogus Business Opportunities.

The FTC remains one of the most comprehensive res for investigating – and reporting – work-from-home scams. But there are a few more cautionary steps. Check with your local Better Business Bureau to see if the company offering the opportunity has a reputation (good or bad). Google the business to check if existing complaints about fraudulent activity appear. Another great re? Fraud.org, a project of the National Consumers League. It offers news, info and even a form to report online or telemarketing incidents

The Bottom Line

Finally, if you think you've been duped, make sure to contact your local or state consumer affairs agency to make a report. Remember, these scams aren't simply annoying, expensive, and embarrassing for innocent citizens who trustingly invest their money and time. They're illegal – and punishable by law.

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