3 Scams Targeting Home-Based Entrepreneurs and Online Job Seekers

Many people believe scams are obvious and easy to avoid, but unfortunately, there are an increasing number of sophisticated scams. “There are an estimated 60 to 70 scams for every one legitimate work-from-home position. Anyone seeking telecommuting roles have to be vigilant in guarding against fraudulent opportunities,” says Sara Sutton Fell, founder and CEO of FlexJobs. According to a FlexJobs survey, 17% of job seekers have been a victim of a job scam at least once. Only 5% have never seen a scam.

Here are three opportunity scams you need to avoid:

Online Interview with a “Real” Company: Scammers use the names of real companies to lure unsuspecting job seekers online. Once they’re “hired,” people are either scammed by providing their private information (such as a Social Security number, bank account, or both).

Contact the company to ensure the job is legitimate, but don’t use the number the recruiter provides. Do a fresh Google search to find the company’s website, and then verify that company actually has a job opening for the position you’re applying for. Search for the job online. If the result comes up in other cities with the exact same job post, it’s likely a scam.

Multi-Level Marketing (MLM): The largest MLMs are household names: Avon, Mary Kay, Pampered Chef, and Amway that generate annual sales of about $30 billion with about 16 million people in the U.S. selling their products, reports the industry group Direct Selling Association. One big problem with MLMs is when ladder climbing is more important than selling actual product. If an MLM opportunity is all about finding new recruits rather than selling products or services, beware. The Federal Trade Commission says it a pyramid scheme.

If the company and its distributors make money primarily from the sale of products to end-users and not boxes of product accumulating in a distributor’s garage, it’s OK. By contrast, a pyramid scheme compensates those at the top of the pyramid with participation fees paid by those recruited at the bottom. It eventually collapses when the scheme can’t recruit more people.

Mystery Shopping: Some retailers hire companies that use mystery shoppers to evaluate the quality of service in their stores. They make purchases in a store or restaurant and then report on the experience. The shopper is reimbursed and can keep the product or service. Some also receive a payment. However, dishonest promoters use newspaper ads and e-mails to create the impression that mystery shopping is a gateway to a high-paying job with reputable companies. They create websites where you “register” to become a mystery shopper by paying a fee.

Becoming a mystery shopper for a legitimate company doesn’t cost anything. Check the Mystery Shopping Providers Association’s database to search mystery shopper assignments and learn how to apply for them. MSPA offers certification programs for a fee, but you don’t need “certification” to apply for assignments.