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How To Spot a Home-based Business Scam

Doug Terwilliger, NEA Member Benefits

Working from home might seem like a great idea for making extra money, but before you sign on to any program, carefully examine every detail. While there are many legitimate business opportunities, you must be aware that there are some work-at-home plans offered by companies whose only purpose is to defraud you.

Popular scams

According to Identity Fraud, Inc., the most common home-based scam is envelope stuffing. The premise is simple: You will be paid a set amount for each envelope you stuff.

All you need to do is send a registration fee of around $40, and you will receive a starter kit that includes a list of companies that might want to pay you to stuff envelopes for them. Here’s the catch: You don’t get paid for simply stuffing the envelope.

You only get paid when someone actually responds by sending you their up-front fee along with a self-addressed, stamped envelope. It’s a nasty hybrid pyramid scheme and chain letter.

Another scam is medical billing. Here, you have to put up between $300 and $900 for a list of “potential clients” and software to start your own medical billing service at home. What they leave out of the sales pitch is that most doctors and medical clinics process their own bills, or outsource the processing to large firms, not individuals.

Also, watch out for companies promoting “craft assembly.” This scam encourages you to assemble toys, dolls, or other craft projects at home, promising high per-piece payments for the finished products.

Once again, you must pay a fee up-front for a starter kit that includes instructions and parts. What you are never told is that the company will always reject your finished products, claiming that they “don’t meet our specifications.”

Sometimes, the offer to start your own home-based business is just a simple request for you to call a “1-900” to get more information. Well, you pay to call 900 numbers, and that’s how the scammers make their profit.

Use these preventative measures

Do your homework before you try out any work-from-home program. Additional tips and articles about working from home are available online. Try or

To avoid being pestered by telemarketers offering “business opportunities,” use an answering machine, or caller ID. Sign up for the national “do not call” registry. It’s free. Call (888) 382-1222 from the phone number you want to register, or go to .

You can also check the NEA Member Benefits Web site for important articles and services to combat fraud and identity theft.

Targeting Seniors for Home-based Businesses

Seniors are often targeted by defrauders who play upon their victims’ trust. Swindlers skilfully take control of the conversation and are prepared to tell any lies necessary to keep potentialvictims on the phone. Identity Fraud, Inc., provides these valuable tips:

  • Know whom you’re dealing with. The company may not be offering to employ you directly, only to sell you training and materials and leave you to find clients on your own.
  • Don’t believe that you can make big profits easily. Operating a home-based business is just like any other business—it requires hard work, skill, good products or services, and time to make a profit.
  • Find out if there really is a market for your work. If the company claims it has customers waiting, ask who they are and contact at least a few of the companies to confirm.
  • Know the refund policy. If you have to buy equipment or supplies, ask whether and under what circumstances you can return them for a refund.
  • Beware of offers for an “advance”on your “pay.” Some con artists usethis ploy to build trust and get money directly from your bank account.


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