Schemes on the home front - fraudulent work-at-home schemes - Brief Article

Black Enterprise, Oct, 2000 by Takita W. Mason

In-house employment opportunities don't pan out

You have probably seen this ad in one of your local newspapers: "$356 Weekly Guaranteed. Work two hours daily at home stuffing envelopes. No experience needed!" Or maybe this one: "You can earn from $800 to $1000 weekly processing insurance claims on your home computer for healthcare professionals such as doctors, dentists, etc. Over 80% of providers need your services. Learn how in one day!"

Don't fall for them. These are just two of the many different work-at-home scams that victimize consumers. "Some of the oldest [work-at-home scams] involve envelope stuffing, but there are new types of [false] business offerings, such as craft and jewelry making kits, advertising kits and the more sophisticated medical billing scheme that entice you to buy computer equipment and software," says Susan Grant, director of the National Fraud Information Center operated by the National Consumer League (NCL). "You don't get the training that the crooks promise you, the software is out-dated and they also don't follow through with their promise of lining you up with doctors and dentists," Grant contends. "They're just luring you in on false promises."

But most people are drawn to the prospect of operating a home-based business, which is why this type of scam is on the rise. Work-at-home schemes were the No. 1 fraud complaint among consumers in 1999, up from No. 5 in 1998, according to Tracey Bickel, director, public relations, for the Better Business Bureau of Greater Maryland. During that period, the number of complaints regarding work-at-home scams skyrocketed from 1,416 to 5,561 nationwide. "I think the difference may be that [unscrupulous businesses] are going about these work-at-home schemes differently. The usage of the Internet [for these schemes] has risen and companies are targeting different groups than they have in the past. People are more conditioned to having some sort of caution about an ad they see in the [newspaper] but [consumers] don't seem to take that same knowledge and transfer it over to the Internet," says Bickel.

Still, the key to distinguishing a financial find from a financial bust is being able to identify the most common types of work-at-home scams, avoiding them when you see them, and thoroughly investigating the companies that you're considering working with.

Work-at-home advertisements predominantly target the disabled, mothers who stay home after having children, the unemployed, and the elderly, explains Grant. She says, "[The companies] target people who are desperate to make money." You can find them in popular magazines, business journals, tabloid newspapers, classified ads, the Internet, direct mail solicitations, and hand-distributed flyers.

According to Grant, work-at-home schemes are particularly harmful because victims themselves may become perpetrators of the crime. For example, you send $30 or $40 for the information on how to make money by stuffing envelopes for a particular company. Instead of receiving the materials to stuff into envelopes for that company, you get instructions on how you can advertise the original ad that you saw so you can get others to send you money for the same materials.

But how can you determine whether the company you plan to deal with is legitimate?

* Ensure that you have the proper contact information for the company sponsoring the offer. First, check that you have a working, accurate telephone number. Then obtain an actual address, as opposed to a P.O. Box.

* Obtain a company report from the Better Business Bureau. Check with the BBB in your area to determine whether the firm has any complaints lodged against them from other consumers.

* Be very leery of companies that ask for money up front. Compare work-at-home opportunities with employment at an office. Would you consider cutting a check to an employer after an on-site interview?

* Understand and clarify the payment terms. Will you be paid by salary, commission, or per diem?

* Take a realistic assessment of the promise that is being made. "There are a lot of people that operate home-based businesses. They will be the first to tell you that profits don't come easily," says Grant. "Anyone who says otherwise is lying."