Risky Business

How to Avoid Work-At-Home Scams

Because of the sluggish economy and high unemployment, the chance to work at home seems more appealing than ever. But scam artists are finding new ways to rip off consumers who are desperate for jobs or who simply want to earn some extra cash. Because legitimate work-at-home jobs are scarce, it’s important for consumers to understand that earnings are limited even for above-board opportunities, and that most ads for home-based work are bogus.

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On a typical workday, Patrick Campbell starts his shift as a customer-service agent for a Denver-based call-center agency at 3 p.m. To get to work, all that he does is stroll to a back bedroom that he converted to an office, pull on a headset and dial into a secure phone line next to his computer. Few of the smartphone owners whose technical questions Campbell answers for several hours each day realize that they have reached an Abilene, Texas, apartment and not a brick-and-mortar call center.

Campbell’s work-at-home arrangement is one that many people might envy, and not just because he can—and has—worked in the comfort of his bathrobe. At a time when 78 percent of U.S. employees say they would like to work from home, according to a 2009 study by WorldatWork.org, which is a nonprofit human-resources research organization, Campbell is among the few to have found a legitimate work-at-home opportunity. His experience should be viewed as both an inspiration and a cautionary tale.

The growth of home-based work is a silver lining in the weak economy. However, the economic doldrums mean that there’s more competition for the scarce legitimate home-based positions, and there are more scammers than ever before who hope to cash in through fraud or misleading schemes.
TROUBLING TREND. Home-based employees account for only 2 percent of U.S. workers, according to Census Bureau data, but their ranks are growing. Home-based workers, freelancers and independent contractors who worked full time or part time from home numbered 18 million at the end of 2009. The number of those workers will increase annually by about 350,000 in the next few years, according to IDC, which is a market-research firm.

Yet work-at-home and other business opportunities in 2009 were ranked as the sixth-most common form of fraud on the list of Top 10 scams that was published by National Consumers League’s (NCL) Fraud Center. Complaints to federal law-enforcement agencies about fraudulent job offers and work-at-home schemes grew by more than 10 percent in 1 year to 22,896 victims in 2009, according to Federal Trade Commission. The number of victims likely is much higher than FTC figures show, because most cases go unreported, experts say.

And they say this increase in the number of victims reflects the shaky U.S. economy and the high rate of unemployment, which rose to 9.5 percent in June from 5.5 percent in June 2008.

Work-At-Home Warning Signs

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“Scams creep up when the economy goes south, because people are more willing to look at these offers seriously,” says John Breyault, who directs NCL’s Fraud Center. A 2009 survey by NCL found that 31 percent of respondents were more likely to consider starting a home-based business to increase their earnings, which makes them more vulnerable to fake pitches from fraudsters.

Nearly all advertisements for work-at-home opportunities are placed by con artists who have no intention of giving anyone a legitimate job, according to the experts whom we interviewed. Christine Durst, who is CEO of Staffcentrix, which is a work-at-home research firm that screens 4,500 to 5,000 home-based work offers each week, says bogus opportunities outnumber legitimate ones 60 to 1. “It’s horrible,” she says.

After we interviewed five experts, it’s clear to us that work-at-home opportunities typically fall into three categories:

  • Blatant scams that are easy to identify.
  • Misleading and sometimes risky money-making strategies that often produce little if any payoff.
  • Legitimate home-based jobs that can produce a steady but unspectacular income.

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