Advisory Column: Avoiding online business opportunity scams
QUESTION: I recently read your article 'A Beginner's Guide to Earning Online'. Very interesting read. Very helpful information. I, too, have wondered how money could be made online in a secure manner without any scam traps, get-rich-quick schemes, or quick sand traps I should not get close to. You see, I am a student at the University of Technology Jamaica and I've been dying to find something to bring in income for me and my family (me and my beautiful wife). I read the article and it caused me to think of the said way of income earning and has prompted me to think of other creative ways to earn money. Then I came across a video on YouTube that promised big earnings every month. Naturally, I thought to myself: Is this for real? Then the other thought was to ask an expert. So, Ms Page, what are your thoughts?
BUSINESSWISE: One of the most important lessons in earning money online is that if you come across an 'opportunity' that seems too good to be true, it almost always is a scam. I viewed the YouTube video you sent me. The type of income it promises is nothing to laugh at. It amounts to an annual income of almost US$180,000, which is more than three times the current median household income of Americans.
The video begins with a screen shot of a supposed bank statement showing a chequing account balance of over US$12,000 and a 'day-to-day saving' of US$5,000. That bank statement and two big red arrows directing you to click the link in the description is the only image you see in the entire three-minute video in which a person, sounding like a man with an American accent, introduces himself by name only, and claims that the bank balance is his. He also says he wants to help women earn a lot of money so they can stay at home and take care of their children. Of note is his claim that mothers can earn these huge sums of money without putting in regular or long work hours and that they can finally quit their jobs or stop searching for work.
Internet income red flags
The video raises all the red flags of a scam, and I would not recommend that you pursue it. Generally, Internet income scams tend to have the following characteristics:
1. A promise to make huge sums of money;
2. A promise to make money fast;
3. A promise to make money with little effort;
4. A very vague description of the opportunity;
5. An absence of the scammer's image or likeness;
6. An urgent request to take action;
7. Upfront payment to access the opportunity;
8. Promises that seem too good to be true.
You should note that work-at-home employment scams are among the biggest and most serious on the Internet. In fact, the US Federal Bureau of Investigation made an alarming revelation about these scams in its 2013 Internet Crime Report:
"Work-at-home scams continue to be very successful as more and more people turn to the Internet to look for jobs. Poor economic conditions lead people in financial hardships to accept any job they are offered. Although many work-at-home victims are unwitting in their participation in these scams, others are witting participants. Regardless, these individuals can face criminal charges, and, potentially, prosecutions. Victims of work-at-home scams are often recruited by organised cyber criminals through newspaper ads, online employment services, unsolicited emails or 'spam', and social networking websites. Victims of work-at-home schemes become 'mules' for cyber criminals who use their financial accounts to steal and launder money," the FBI report says.
There are millions of business and income opportunities available online, and the majority of them are fake. Each year, more than 250,000 people report being scammed online, while many others suffer in silence, too ashamed to make a formal report.
In the last five years, unsuspecting Internet users are reported to have lost over US$3 billion to online scams, but the figure is likely to be far higher given the chronic problem of under-reporting of these types of fraud.
The US Federal Trade Commission notes that some of the most prevalent business opportunity scams fall in the categories of franchise opportunities, starting an Internet business, multilevel marketing, work-at-home business, at-home medical billing, envelope-stuffing schemes, mystery shopper, investment and business opportunities seminars, and job scams.
The best way to empower yourself against Internet scams is to become knowledgeable about them and temper your expectations on legitimate opportunities to earn online.
As I have stated emphatically in many previous articles, there is no shortcut to success when it comes to creating legal and sustainable revenue sources. It usually takes time, training, experience, and you will not get rich overnight. I suggest you reread my article on earning online and explore the legitimate websites and opportunities I outlined.
Yaneek Page is an entrepreneur and trainer in entrepreneurship and workforce innovation.