Multilevel marketing scams and Pyramid schemes are nothing new. However, the speed at which these scams can spread is getting quicker and quicker because of the proliferation of the Internet.
When you combine this fact with the state of the economy, it should be no surprise that scam artists are alive and well. Whether they are advertising to you on the Internet to buy a Google advertising cash kit or conning your grandparents into paying $2500 to get rid of their mortgage debt, a bad economy means good business.
Sniff This Out
Here are some of the most common promises a money scam will use to try and bait you.
Work From Home
I will hire my first reader that contacts me to answer my e-mails and respond to comments on my blog.
Before I get inundated with e-mail requests from people looking for a quick buck, this is not a real offer. However, I’m going to walk you through this article using this as an example.
When you read about an opportunity to work at home, you need to be cautious. REAL opportunities to work at home are few and far between. And in the few instances where you can work at home, you will usually be receiving a salary from the company you work for. This is referred to as telecommuting.
The phrase work from home is usually used as a hook to capture people’s attention. Do not fall for the bait. But looking back at my first sentence it’s pretty easy to see how people get caught up in the hype.
Make Substantially More Than The Job is Worth
To sweeten the original offer, I will pay my first reader that contacts me $3000 per week to answer my e-mails and respond to comments on my blog.
Oftentimes, a money scam will not only promise you the ability to work from home, but it will promise you a much more substantial income than what seems reasonable.
Before you get excited, you must ask yourself how they would be able to afford to pay you so much when much larger and more legitimate companies only pay a fraction of the amount.
Quick & Easy / No Work
To clarify your job responsibilities, you will be solely responsible for answering all of my e-mails and responding to all of my blog comments. I get about six comments per day and about 25 e-mails per day on average.
Whoa whoa whoa!! This job just keeps getting sweeter and sweeter. At this point you can see how this scam develops to carefully hook you line by line. The job goes from feasible to unfeasible pretty quickly.
The promise of a quick and easy job where you make a substantial amount of money working from home is all too common. This should be a big red flag.
Operates on a Tier System
The best part about the job is that you get to try your hand in the sales aspect of my company. My company is one of the strongest brands in selling virtual assistants. You will have the opportunity to earn a large amount of money selling the services. I will train and mentor you all along the way.
Ah-ha, so now you see that a large part of your pay, if not all of it, will be based on a tiered sales pyramid. I’m not really hiring you to be my virtual assistant, I am just trying to get you to buy into the program so that I can get a commission. By doing so, I will increase my earnings and thus will increase the person above me’s earnings.
By definition, a tiered system operates on the premise that the base feeds the top. The later you get in, the higher probability you will lose.
Have to Pay to Get Hired
Oh, by the way… In order to be considered for this job you must send me $29.95 to cover the application and processing fees. If chosen, you need to Western Union me $99.95 for a secretarial package to get you started.
Usually this part is saved for last. In all of your excitement that you are about to get a job that pays thousands per week, you don’t think twice about paying a measly hundred bucks here and there. However, when is the last time you applied for a job with a Fortune 500 company and had to bring them a check to cover their expenses of the job hiring process. Never.
Unless you are 100% certain, a job that asks you pay to get the job should be a signal to run the opposite direction.
Stay On Guard
Part of smelling a money scam is remaining rational in the midst of what seems to be a great deal. Your greatest advocate is yourself and thus you must remain vigilant at all times.
Just take a step back and think rationally: Can MLR really afford to pay me $3,000 per week to be his assistant? And are virtual assistants really that profitable? Can I find any information on his company? Maybe even through the BBB?
I'm MLR. After graduating from college debt free, I decided to write a blog encouraging people to adapt responsible and sensible personal finance rules.
February 2nd, 2010 at 9:38 am |
One of my favorite work from home SCAMS is the one where you end up getting arrested for shipping stolen merchandise. It is just crazy how many crazy’s there are out there. I think the easiest way to spot scams is to just stick to the old adage, if it seems to good to be true then it probably is.
Kyle C.´s last blog ..Review – Crush It! (VIDEO)
[Reply]
MyLifeROI Reply:
February 8th, 2010 at 1:36 pm |
@Kyle C.,
I saw this on a special report with Chris Hansen. He went to peoples houses and they thought they were working for their fiance from another country. Then Chris helps them find out they are being taken advantage of by a Nigerian.
The one commonality shared between all of them was that they seemed to be in tough spots, thus easily taken advantage of.
I think there was also a mother/son combo who would buy stuff like iPods with stolen credit cards and then return them to other stores for store credit.
[Reply]
February 2nd, 2010 at 12:05 pm |
Hey, when do I start? :)
I’m always amazed that some people have a seriously flawed Fraud-dar system.
Kosmo @ The Casual Observer´s last blog ..Kosmo’s Sports Wrap
[Reply]
MyLifeROI Reply:
February 8th, 2010 at 1:37 pm |
@Kosmo @ The Casual Observer,
Har har. :)
What seems like common sense seemingly isn’t. Weird, right?
[Reply]
February 2nd, 2010 at 12:23 pm |
Very good post.
Speaking of scams–anybody heard of the Monavie Juice scam?
Its the latest and greatest. A supposed “cure-all” juice that slows aging and about a milliopn other things.
And its only $40 a bottle!! Oh, and you need to drink a bottle a week.
David/Yourfinances101´s last blog ..Thinking about Going Vegan? Organic? The Financial Effects…
[Reply]
Kosmo @ The Casual Observer Reply:
February 2nd, 2010 at 2:20 pm |
@David/Yourfinances101, Oh, but look at the ORAC scores!
;)
Kosmo @ The Casual Observer´s last blog ..Kosmo’s Favorite Sports Moments
[Reply]
Darwin's Finance Reply:
February 3rd, 2010 at 5:30 pm |
@David/Yourfinances101,
Yeah, that juice thing’s outrageous. Someone here at work was pushing it and I didn’t even know it was an MLM initially. They were claiming how great it made them feel and I said it tasted like bad grape juice when I tried it. Anyway, if you follow lazymanandmoney.com he did a pretty massive piece on this. Thousands of comments and legal threats later, he’s still fighting them on his piece. The corporate behavior and the whole business model – leaves much to be desired.
[Reply]
MyLifeROI Reply:
February 8th, 2010 at 1:38 pm |
@David/Yourfinances101,
As Darwin mentioned above, Monavie Scam over at Lazy Man & Money.
Pretty crazy.
[Reply]
February 3rd, 2010 at 1:12 pm |
Having a rational thinking will always save you, such as in those offer above. A lot of people are still uninformed about different types of scams. In a free world such as the Internet, anything is possible..
[Reply]
February 3rd, 2010 at 5:38 pm |
About the juice thing–doesn’t surprise me. There’s a guy where I work pushin’ it, and he bought in hook line and sinker.
Its pretty sad actually.
David/Yourfinances101´s last blog ..A Little Blog Rodeo
[Reply]
Roger Reply:
February 8th, 2010 at 2:38 pm |
@David/Yourfinances101, there’s apparently a website about the whole Monavie scam: http://www.juicescam.com/ I believe it may be written by Lazy Man of Lazy Man and Money (Lazy Man has written some scathing things about Monavie in the past, and he links to the site from his own), but I can’t say for certain. Kind of sad, a pyramid scheme based around juice…
Roger´s last blog ..Financial Samurai’s Alexa Challenge
[Reply]
February 4th, 2010 at 8:22 pm |
I love those lines! We have all seen many of them.
Great read!
[Reply]
February 5th, 2010 at 9:23 pm |
Wish this sort of cautionary post were as readily proliferated as the scams themselves. My grandma used to fall for these sorts of things all the time…depressing even to think about. Thanks for the great article; I hope it serves to protect at least a few readers…
Justin´s last blog ..Chasing Zero Payments
[Reply]
MyLifeROI Reply:
February 8th, 2010 at 1:40 pm |
@Justin,
Education is the key. My mom is always asking me about these kinds of scams. The scary part is she references them as if they are opportunities.
That’s actually why this post was on my mind :/
[Reply]
February 8th, 2010 at 5:55 am |
interesting article, on money scams that is. I agree that most online offers are too good to be true. My client Assured Guaranty, however, offers fantastic municipal bonds that specialize in providing a safe investment.
[Reply]
February 8th, 2010 at 2:40 pm |
*Finishes writing out a check, waiting for MLR to provide a mailing address.* Wait, you mean there’s no PO Box for me to send my check made out to CASH? What kind of shoddy deal is this?
Kidding; good advice, and humorous presentation. Great work on both accounts, and keep it up, MLR!
Roger, the Amateur Financier´s last blog ..Financial Samurai’s Alexa Challenge
[Reply]
February 11th, 2010 at 8:36 pm |
Nice post!
I have also heard a lot about that Monavie Juice Scam.. Monavie began offering help to people, giving them products that offer to deliver certain degree of wellness.It’s $40 a bottle with a bottle lasting only around one week. That means you can expect to pay around $175 a month for this juice. For many people, that’s a significant car payment. For this kind of money, one would expect some sort of guarantee, perhaps a popular, publicly-traded, pharmaceutical company standing behind it. The company also doesn’t publish how much of the acai berry is each bottle.There are lot of people commenting about MonaVie on the Internet.
[Reply]
February 16th, 2010 at 12:07 pm |
Unfortunately, it’s people who need the money the most are the ones who usually fall for such schemes and scams. The money would be better spent trying to find an honest job with benefits, if possible. Too, since working at home is becoming so popular, spending the extra time at the library making an effort to learn more about how to market some of the skills you have would definitely be worth the investment. But, of course, that is why “scammers” are still doing their thing and getting richer. It is just too easy and there is a still a market for them to prey on.
Lillie´s last blog ..Teen Credit: The good and bad that you need to know.
[Reply]
April 27th, 2010 at 3:51 pm |
Fantastic website, I just came across it and I am already a fan. I recently shed 30 pounds in 30 days, and I want to share my weight loss success with as many people as possible. If I can lose the weight then any one can. Whatever you do, never give up and you WILL accomplish all your weight loss targets!
[Reply]