How to Spot Work-at-Home Scams?

COVID has prompted a severe uptick in fraud, identity theft, and scams. One such scam that many desperate, out-of-work Americans are falling for is a work-at-home scam.

What is a Work-at-Home Scam?

A work-at-home scam may be an ad for a “job” that does not exist, designed to extort information from you. It can also be an actual job where you work for peanuts or are promised “future income” that never comes.

Sometimes these scams are called get-rich-quick schemes because the perpetrators use language that promises a wealth of income quickly for minimal effort. However, most of these types come with an initial “investment” the victim has to pay for supplies or equipment, and then they are told once they are up and running, the cash will pour in. 

 Additionally, if you are interested in legitimate work-at-home options, check these home based businesses ideas.

Some Common Work-at-Home Scams to Watch Out For

There are dozens of work-at-home scams currently in use, but scammers devise new ones all the time. Some of the more common ones that victims have lost thousands of dollars to are:

Envelope Stuffing - Ads promising a high income by simply stuffing envelopes sounds great, but it’s not quite that simple. After you pay for the initial “supplies,” you are instructed to scam other people into buying the same envelope-stuffing kit. The only way you make money is if enough people buy your scam. It’s a pyramid-style fraud scam. 

Craft/Assembly Kits - Other ads may promise you can make a living assembling parts for small toys or crafts. The company that hires you pledges to buy the finished product once you assemble the pieces. You pay for the supplies, and the company rejects your completed products for “poor quality” or other reasons. They had no intention of ever buying them; they simply wanted you to buy supplies. Now you have wasted time and money, and you never see a dime. 

Online Business - Another tricky way scammers get you is to advertise that you can make a mint setting up a small internet business. You don’t even have to have any experience or special skills; they can train you and help get you up and running quickly. Unfortunately, after you pay the initial “investment,” you will continue to be upsold for more expensive/necessary services and never end up with a real business that does anything.

Medical Billing - It sounds like an easy job, processing medical bills in your spare time for good money. Except for one thing, it is a scam. Medical billing professionals require training and expertise. If you respond to this ad, all you will get is a salesperson trying to get you to pay hundreds or thousands for equipment, software, and training along with a list of clients. Typically, these are just scams that sell outdated lists and defunct software. 

Mystery Shopping - Another popular one that appeals to shoppers is becoming a mystery shopper where you visit certain shops, restaurants, or online stores to sample the wares and provide feedback. Although a few mystery shopping gigs are legitimate, most are not. You may be offered a check in advance, and then the sender requests that you refund a portion. Before their check bounces, you send money off and have lost to a scammer. 

Marketing (AKA Pyramid Scheme) - A multilevel marketing (MLM) plan is basically a pyramid scheme. You buy products to sell; you then have to recruit others to buy products and start selling them. You only begin to make any money when you have dozens of people below you and dozens more below them, and so on. Unfortunately, scammers use fancy ads and promise luxury lifestyles for these types of scams to lure you in. However, pyramid schemes are illegal, and you won’t just be out some time and money; you might end up behind bars.

How to Know if it is a Scam or Not

The most obvious way to know that it is a scam is to remember if it sounds “too good to be true,” it is. The FTC offers the following questions to use as guidelines to evaluate whether or not a job is a scam:

• “What tasks will I have to perform? Are any other steps involved?
• Will I be paid a salary, or will I be paid on commission?
• What is the basis for your claims about my likely earnings? Do you survey everyone who purchased the program? What documents can you show me to prove your claims are true before I give you any money? Note: If a seller makes a claim about how much money a person can earn, the seller also has to provide you with an [earnings claim statement](https://www.ftc.gov/tips-advice/business-center/guidance/bogus-business-opportunities) with more specifics.
• Who will pay me?
• When will I get my first paycheck?
• What is the total cost of this work-at-home program, including supplies, equipment, and membership fees? What will I get for my money?”

The FTC also urges you to download their Opportunity Rule questionnaire and ask your potential new employer to fill it out. 

How to Report the Work-at-Home Scam

If you find out you have been scammed by a work-at-home scheme, contact the FTC to file a complaint. You can also contact your Attorney General and the Better Business Bureau to report any theft and file a report.