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How do they do that?
Making Money Without Working
General Business News
September 2007
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How do they do that?
Making Money Without Working
You’re sitting in your living room late at night, the thriller is coming to its climax and…a commercial comes on. “We made $10,000 last month working only five minutes a day,” the young couple testifies as the children are swinging in the background. You think to yourself that sounds terrific! I want to get in on that. You see all of your dreams coming true as the narrator tells you to call 1-888-XXX-XXXX, so you pick up the phone to call to start raking in the bucks.
Do you see anything wrong with this scenario? You know it’s ‘real’ since a clean cut young couple just said they earned $10,000 in one month. Don’t forget that most “couples” on television are actors who get paid to say these things. How much effort did they put into this part-time gold mine? Even the very rich spend more than five minutes a day on their business interests.
The fact is that commercials like these are almost inevitably frauds designed to fleece you. They are aired at times and on channels where the audience is likely to be less affluent and in need of extra income. For some, the promised income will simply make life easier; for some, the extra income means the children will eat. The one common thread among all targets of scammers is that they are desperate. Whether the desperation is from a need for life’s necessities or a perceived need to keep up with the Joneses, some people simply must have money - the scammers know that and use that desire to take from them.
So how do you protect yourself from home based business fraud? You avoid the schemes designed to take your money. Using a combination of common sense, research and patience, make sure you are working with legitimate companies. This article is intended to help you with all three activities.
First, you need to know about a few of the more common schemes:
Envelope stuffing – This scam offers to pay you outrageous sums for stuffing envelopes at home in your spare time. Supposedly, you get stamped envelopes and the material that is to go in them. Then you stuff and mail the envelopes. All you have to do is send in a small fee to learn how to take advantage of this amazing offer. The only problem is that you don’t get much for your fee. You either get nothing - or you may get a book that tells you how to scam other people with similar schemes.
Assemble at home – In the typical home assembly scam, you are required to make an “investment” in supplies and (perhaps) a guide to companies that pay you to assemble their products. When you receive the materials, you assemble the product and send it back to the company for which you work. Unfortunately, your paycheck never comes. Instead, you get a letter from the company telling you the quality of your work is not up to company standards and, therefore, no payment is due.
Fraudulent e-mail – In this scheme, the scammer tells you that you can learn the secrets of making money using your computer part-time. Unfortunately, the only “secret” is to send your own e-mail claiming to teach the recipient how to make vast sums of money using their computer part-time.
Pyramid schemes – Also known as multi-level marketing, pyramid schemes live up to their name. The object is for you to recruit people to sell products, on which you get some override commission. These people build their own organization of entrepreneurs and receive an override on their recruits’ sales. You also receive income from your recruit and any people he or she may bring into the scheme. Ultimately, you have a pyramid that gives money to those at the top and takes from the people at the bottom. It has been estimated that 99% of the people who enter into one of these schemes lose money on the deal.
These home-based businesses are the typical scams you will encounter. Anytime you hear about one of these forms of business, stay away. Before you respond to a home based business ad, check with the Better Business Bureau, consumer watchdog agencies and websites, and even the attorney general in your state. If the business is clean, you won’t find any major complaints against it and you will find financial information and reviews as to the validity of its claims. If you can’t find out anything about the company, avoid it like the plague.
Use your common sense in evaluating a business opportunity. These companies, in a sense, are “hiring” you to hawk their products – or so they say. How many potential employers do you know who require a fee up front to give you a job? This should be your first tip-off that something isn’t quite right. If you have to send money to get secret information, you probably don’t need it!
Have you ever heard “If it sounds too good to be true, it probably is”? If not, you just read it and that is sound advice. If a scammer can make outrageous profits by engaging in a legitimate online business, why would he or she offer to share the wealth with you for a small fee? Wouldn’t it be worth far more than $99.99?
Finally, remember that these scams rely on your impatience to earn extra money, when it actually takes time and hard work to establish a profitable business. There are few, if any, legitimate shortcuts to that goal and ‘get rich schemes’ are generally just another means of theft.
Coming back to the title of this article, the way these scammers make large sums of money is by stealing it from you. If you are looking at what you think is a legitimate business opportunity, let us help you evaluate it. We have the experience and expertise to help you make solid business decisions.
Have a terrific September.
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These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact their CPA regarding the topics in these articles.
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