Work From Home Scheme Lands People in Debt

26 Feb Work From Home Scheme Lands People in Debt

     The Federal Trade Commission warns about work-at-home schemes and how to spot bogus offers:

Ever thought about responding to an enticing email or ad saying you could make money working from home? Then you might be interested to hear about the FTC’s case against the Coaching Department and its related companies, which the FTC alleges strung people along in a three-part scam that raked in tens of millions of dollars. For out-of-work people who got caught up in this business opportunity scam, it was a problem that went from bad to worse.

Here’s how it worked, according to the FTC:

Phase 1: It started with an email or online search result telling people they could run their own internet business from home. When people clicked through to the company’s sites, they found success stories of people who supposedly made real money with the system, and warnings that the program was quickly filling up. At a cost of less than $100, many people jumped at the chance.

Phase 2: Once people paid and got their work-at-home kit, the next pitch began. For anywhere from $3,000-$12,000 — often depending on a person’s available credit — they could be part of the business coaching program. Not just any program, the company said, but one for select, motivated people that could be “success stories” for marketing materials or infomercials. People “interviewed” for the opportunity would work hand-in-hand with coaches to help them succeed, so they’d easily make enough to pay off their debt in 3-6 months, the company said.

Phase 3: After people paid for the coaching program, they were hit up a third time. This time the pitch was for add-on services like website design or accounting services that would ensure success. People wanting to protect their already substantial investments in the company spent thousands more.

But no matter how much people bought or how hard they worked, most didn’t end up with a working online business. Besides making little to no money, they also ended up heavily in debt, the FTC says. The scam ended when people realized they’d been ripped off or reached the limits on their credit cards.

Many work-at-home opportunities are promoted by scam artists and will cost you more than you can earn. Learn more about evaluating work-at-home and other business opportunities at ftc.gov/bizopps.