In part 1 of this series, we talked about what scammers are after and common warning signs of work-at-home scams. In part 2, we’ll talk about the questions to ask when pursuing a work-at-home opportunity, what to do if someone has been a victim, and multilevel marketing companies vs. pyramid schemes.
Questions to Ask
Anyone considering a work-from-home opportunity needs to do their homework.
First of all, google the company name plus “scam” and/or “reviews.” Of course, take it all with a grain of salt, but you’re likely to learn a great deal. You should also check the company’s reviews on the Better Business Bureau. Check their Scam Tracker as well.
Second, check out the company and associated people on the Internet. Does everything seem legit? Are they who they say they are? Where is their physical office and can you call them up and speak to the person you’ve been dealing with?
Finally, if still considering working for the company, one should find out more specifics about payment. Find out exactly how much and how often payment occurs, and if there is anything that will vary this. Ask what an average employee makes monthly. Ask to speak to some of these employees.
If still feeling skeptical, ask to see proof that the claims they’re making about earnings are true. In fact, under the FTC’s Business Opportunity rule, consumers have the right to ask for a one-page disclosure document that offers important information about “jobs” that are really more “business opportunities” (often fraudulent). Learn more about this important consumer protection here.
If You’ve Been a Victim
Unfortunately, some will fall victim to one or another of these scams. If this is the case for you, or if you are helping someone who has been scammed, here are some resources that can help.
If an identity has been stolen, it should be reported to the FTC at identitytheft.gov, which has many resources to assist in this scenario.
File a complaint with the FTC about work-from home job scams here.
Business-related scams can be reported to the Better Business Bureau’s Scam Tracker.
The attorney general’s office in each state can also assist with business-related scams. Find your state attorney general here.
A Note on MLMs vs. Pyramid Schemes
Multi-level marketing businesses (selling products from home through a distributor, such as Avon, Pampered Chef, Lularoe, Jamberry, etc) are a common way to make money “from home” in the US, and are especially popular for military spouses. They are legal in the United States and are a legitimate way to earn money, though it should be noted that they are not an easy way to make money, and that many people do not earn much in this business.
Pyramid schemes, on the other hand, are illegal. Pyramid schemes may consist of “buying into” a product-based opportunity or may be just marketed as “investment opportunities” with no physical product involved. In a pyramid scheme, each “investor” MUST recruit multiple other investors, and the scheme is solely dependent on recruiting others. Pyramid schemes do not work unless the people at the bottom of the pyramid lose
It can sometimes be difficult to tell the difference between an MLM and a product-based pyramid scheme, because in some ways, the two concepts are similar. However, they are not the same.
MLM vs Pyramid Scheme
- Reasonable start-up costs
- The focus is on the product
- The training is about selling the product, not recruiting more sellers
- Company supports its sellers in selling and marketing product
- Company will buy back unsold inventory from the seller, although it may be at a discounted price
- High start-up costs
- Money is earned through recruiting new members, not through selling product
- Company does not back its products and is not interested in helping sellers market and sell product
- Company refuses to buy back unsold inventory
- Commissions are offered for recruiting new sellers
- Frequent pressure to “size up” your investment or pay more for additional training
If you’re interested in learning more about MLMs, the FTC has more info here. https://www.consumer.ftc.gov/articles/0065-multilevel-marketing
Brunelli, L. (2017). 7 Ways to Protect Yourself From Work-at-Home Scams. Retrieved from https://www.thespruce.com/protect-yourself-work-at-home-scams-4049387
Kohler, C. (2016). Don’t Get Scammed: 4 Questions to Help You Land a Legit Work-From-Home Job. Retrieved from https://www.thepennyhoarder.com/make-money/how-to-detect-work-from-home-scams/
Federal Trade Commission. (2011). Bogus business opportunities. Retrieved from https://www.ftc.gov/tips-advice/business-center/guidance/bogus-business-opportunities
Federal Trade Commission. (2015). Work-at-home businesses. Retrieved from https://www.consumer.ftc.gov/articles/0175-work-home-businesses
Federal Trade Commission. (2016). Multilevel marketing. Retrieved from https://www.consumer.ftc.gov/articles/0065-multilevel-marketing
Wang, J. (2013). 5 Signs that MLM “Opportunity” Might Be a Scam. Retrieved from http://www.businessinsider.com/5-signs-that-mlm-opportunity-might-be-a-scam-2013-1
Ward, S. (2017). Learn to Distinguish Between MLM and Pyramid Schemes. Retrieved from https://www.thebalance.com/is-it-multilevel-marketing-or-a-pyramid-scheme-2947159