Don't Let Scam Artists Trap You - Page 2 of 4

Don’t Let Scam Artists Trap You

like bona fide business opportunities.

For months BLACK ENTERPRISE researched these schemes and how swindlers targeted victims and then pocketed their hard-earned cash. Knowing how these scams work can help you avoid getting ensnared in a con artist’s trap.

FTC’s Mora places scams into two categories:
Work-at-home scams. How often have you seen ads promising thousands of dollars for working at home in your spare time? If you’ve answered one, you may have been a mark in a work-at-home scheme. These con jobs tend to require less in the way of up-front cash and, as the name indicates, lure people intrigued by the idea of working from home.

Work-at-home scams rank No. 2 on the National Fraud Information Center’s Top 10 List, right behind bogus credit card deals. In fact, the Council of Better Business Bureaus fielded more than 460,000 inquiries regarding work-at-home offers in 2001, up 70% from 2000. The organization has also received roughly 20,000 complaints in 2001, up 20% from 2000. “I don’t know of many work-at-home offerings that are genuine,” says Susan Grant, director of the National Fraud Information Center, a project of the Washington, D.C.-based National Consumers League. “Very few companies are going to hire you and set you up with customers the way these promoters often promise. The bottom line is that there’s no way to easily make money by staying home. No one is going to pay you for stuffing envelopes.”

Business opportunity schemes. Generally, these are frauds where investors can lose more than $500. “People might buy overpriced equipment or software packages to go into business,” says Mora. “Investors are given false and misleading ideas as to how much money they can earn. Often, phony references are given to show that others have been successful. After they put their money into the deal, investors find out that there’s no real demand for that product or service.”

So what types of scams are derivative of work-at-home and business opportunity cons? They fall into the following subcategories:

Vending machines. As Cummings learned, bogus companies lure victims into paying thousands for vending machines — often at marked-up prices — then offer to help place them in retail establishments. Usually, the purchasers have to place the machines themselves or eat the cost.

Assembly work-at-home. These schemes require you to invest hundreds of dollars in instructions and materials. Then you’ll spend many hours of your time producing items such as baby booties or toy clowns for a company that has promised to buy them. Once you’ve purchased the supplies and completed assembling the product, the company often decides not to pay you because your work does not meet certain “standards.” Often, victims are stuck with merchandise that’s impossible to sell.

Envelope stuffing. There are several variations on this type of scheme, most of which require you to spend money on advertising and materials. Actual envelope stuffing, though, is hard to come by. According to officials at the U.S. Postal Inspection Service, the envelope-stuffing operations of most businesses use sophisticated mass-mailing equipment. The Inspection Service