As consumers, we conduct some type of financial transaction requiring an educated decision almost every day: shopping for a mortgage or auto loan; understanding and reconciling credit card statements and telephone bills; choosing savings and retirement plans; comparing health insurance policies; understanding our credit report and how that affects our ability to get credit and at what cost; or simply deciding how to pay for a purchase. Education is the first line of defense for us to manage our money wisely and protect ourselves from frauds or rip-offs. One of the growing fraud threats to consumers is the work-at-home scam.

They Just Don’t Pay

Want an easy way to earn extra money from the comfort of your own home? You’re not alone. Working at home has become more attractive than ever to single parents, college students, stay-at-home moms, and others looking for ways to earn extra money. Ads offering the opportunity to make big $$$ working from home can be found in newspapers, on the Internet, even stapled to telephone poles along the road. But the U.S. Postal Service has issued warnings against these offers because, although there are some legitimate opportunities to earn money, many of these claims are simply scams. Unfortunately, as the number of jobs grows in response to public interest, so have bogus job offers.

U.S. Postal Inspectors warn you to proceed with caution.

Most work-at-home jobs don’t guarantee regular, salaried employment. Many neglect to mention that you have to work many hours without pay. Others require that you spend your own money for products or instructions before finding out how the offer works. And the “work” may entail getting others to sign up for the same job which continues the fraud.

During National Consumer Protection Week 2005, Postal Inspectors and the Postal Service’s Consumer Advocate joined other federal, state, and local consumer-protection agencies to educate the public about ways to avoid becoming victims of fraud.

Chief Postal Inspector Lee R. Heath says, “With so many Americans interested in working at home, it should come as no surprise that job scams have grown in popularity but too many offers not only don’t pay, they cost victims thousands of dollars.”

According to Postal Service Consumer Advocate Mike Spates, job seekers should do some homework before accepting a work-at-home offer. “Our goal is to educate consumers so we can reduce their chances of falling victim to work-at-home scams,” says Spates.

Postal Inspectors report the most common work-at-home scam is envelope stuffing. The ads promise you money in return for stuffing envelopes at home. But Postal Inspectors say that none of the promotions they’ve seen pay off as promised.

The newest scam is reshipping fraud. Work-at-home shippers are promised substantial amounts of money all they have to do is receive, repackage, and then mail merchandise to a foreign address. What the shipper doesn’t know is that the merchandise was paid for with stolen credit cards. In effect, the work-at-home shipper becomes part of a fencing operation by receiving and mailing stolen goods. Reports to date indicate the scam has cost victims thousands of dollars, but as long as the ads appear, people unaware of the fraud continue to respond.

Other work-at-home jobs may involve product assembly, craft work, and multi-level marketing. Some ask victims to front money for products or more detailed instructions. Others require that you recruit other people to do the work which continues the fraud.

Postal Inspectors encourage consumers to closely examine offers before responding. They offer these protection tips:

• Don’t give out personal information to a person or company you don’t know.
• Be suspicious of any offer that doesn’t pay a regular salary or involves an overseas company.
• Check out the company with the Federal Trade Commission, the Better Business Bureau, state Attorney General, or your local consumer protection agency.

“Be smart,” says Chief Inspector Heath. “There is no easy way to wealth. If the offer sounds too good to be true, it probably is.” Work-at-home scams have cost victims thousands of dollars. Check out all jobs before responding. Legitimate companies provide information in writing.

How to Protect Against Work-at-Home Scams

You can defend yourself against work-at-home scams. Be alert and don’t take things at face value. Here are claims to be wary of:

•Little or no money needed upfront
•Work part-time and earn a full-time salary
•No experience necessary
•This offer is unique

Do your research. Work-at-home promotions leave many unanswered questions. Don’t send any money until you receive complete, satisfactory answers in writing to the following questions:

• What exactly do I need to do to earn money?
• What will I get for my investment?
• Do I have to buy anything at my own expense?
• What quality standards must I meet for products I produce?
• Will I receive a salary or do I work on commission?
• How do I get paid?
• Do I need to recruit others to the program?
• How do I get my money back if I am not satisfied?

If you don’t receive satisfactory answers to your questions, walk away from the promotion. Chances are good that the promotion is really a scam.

Common Work-at-Home Scams

If you see a promotion advertising the possibility of making good money from home but the promotion isn’t clear about what kind of business it is, what the product might be, how you would contact possible customers, or what the total costs might be, be cautious. This “great new way to make money” may be nothing more than a scam.

Work-at-home scams don’t include the details because the advertisers aren’t really interested in helping you make money. Instead, they are more interested in taking you for as much money as they can and then disappearing from the scene. They are successful because they appeal to our desires to earn more money, avoid having a boss, work fewer hours, and stop commuting. Often scammers tap into people’s dreams of being rich and famous. “All you have to do is spend a few minutes a day to earn the money you need to make all your dreams come true.”

Here are some of the more common work-at-home scams to watch out for:

Envelope Stuffing. This is the most common work-at-home scam, says the U.S. Postal Inspection Service. The promise is that if you send in money, you will receive information telling you how to earn money by stuffing envelopes at home. What you actually get are instructions to sell this scheme to others by placing ads in newspapers to illegally entice new victims. You make nothing unless you recruit others to work for you.

It seems like every newspaper or weekly circular has at least one ad in it promising hundreds of dollars a week, just for stuffing envelopes. Some even promise to pay $4 or $5 per envelope stuffed. So, many people send off their hard-earned money for the required “registration fees” so they can get started on this easy work.

The most prevalent envelope stuffing con game requires that you send in a fee, say $25.00, for which you receive nothing more than a copy of the ad you originally responded to, along with the wording to a classified ad telling people how much money they can make stuffing envelopes, and to send a self-addressed stamped envelope for information. When you receive someone’s envelope, you send them a copy of the ad. You have just “stuffed an envelope.” If the person sends in the registration fee to the operator (like you did), the operator will send you $1 (or whatever was promised in the ad) for “stuffing the envelope.” The operator is left with a profit of $23. Based on typical marketing statistics, you’d have to pay postage for 200 envelopes to get 1 paid response. So at current first-class rates, you pay almost $100 in postage to receive $1-2 in return. Not a very good business investment for you.

Medical Billing Centers. You send money for software to run a bill collection service from your home. The scam artists promise that the “market is wide open” and they have “lined up” clients for you. In reality, you stand to lose your entire $2,000 to $8,000 investment. The software is only an assortment of forms and collection letters that anyone could design. The names of companies they send you are not clients; they are just names and addresses that have been pulled from the phone book.

Assembly or Craft Work. You send money for supplies to assemble products such as aprons, baby clothes, jewelry, or Christmas decorations. Sometimes you must buy the equipment from the promoter. You’re told that there is a ready market for the products or that the company will buy the products from you. The catch? Your items never meet “quality standards” so you end up having to sell the items yourself.

Business Opportunities. You send money for information about starting a business from your home. The details are vague but the promises are big and include claims that “we will provide all the training you need.” The catch? The fraudulent salespersons will constantly try to sell you more information about special “training and support systems” and “your personal coach.” Anyone who really had business ideas as good as these claim to be would never offer this information to thousands of strangers.