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Work From Home Scams – How to Avoid These Fake Job Opportunities

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The number of full-time remote workers is growing rapidly, according to data compiled by FlexJobs. About 4.7 million Americans worked remotely on a full-time basis in early 2020, up from 3.9 million in 2015.

Millions more Americans work from home on a part-time basis, often as part of a work-from-home arrangement negotiated with their employers. Others work part- or full-time from home as self-employed solopreneurs or small-business owners with all-remote employee and contractor teams.

Because work-from-home arrangements vary so widely, the relative pros and cons of working from home vary as well. Those of us who work full time out of a home office employ well-worn strategies to improve productivity while working from home. These strategies are even more essential for those parents working from home.

Another vital work-from-home strategy that doesn’t get as much attention — but should — is avoiding work-from-home scams.

The temptation to increase earnings with active and passive income streams is great, especially in tough economic times and for those not presently working full time. Enterprising scammers prey on our natural inclination to maximize the economic value of our work. When they succeed, they leave us worse off — financially and psychologically — than before.

Unfortunately, there are many common work-from-home scams. But there are also plenty of tips for spotting and avoiding them. Keep these tips close at hand as you seek out legitimate ways to earn income from home.

Common Work-From-Home Scams

Businessman Stacking Blocks With Dollar Signs Pypramid Scheme

While individual work-from-home scams often crop up and disappear faster than the authorities can track them, many take on familiar, easy-to-recognize forms. Common work-from-home scams include “middleman” opportunities, such as forwarding packages or cashing checks for a third party, in-home manufacturing and assembly, pyramid schemes, ill-defined “business opportunities,” and gray-area pursuits that can be legitimate but often aren’t — such as mystery shopping and medical billing.

Starting Your Own Internet Business

This scam sounds like a dream come true: a plug-and-play business (often advertised as a “proven system” or “business-in-a-box”) you can run and scale without ever leaving the house, earning thousands of dollars per month in short order.

There’s just one catch: Before you get started, you need to pay for expert “coaching” and other vague services that (the offer claims) are essential to your success. These services can cost thousands when all is said and done. If they’re even delivered — and the worst of these scammers simply pocket victims’ money without providing anything in return — they’re not at all useful. Often, these “services” merely consist of information you can find on your own through open-source research.

High-pressure sales is a defining feature of the Internet business scam. Scammers advertise offers as being available for a limited time only and relentlessly pressure those who express any interest to act before it’s too late. According to a detailed fact sheet on Internet business scams produced by the Federal Trade Commission (FTC), these pressure tactics often convince victims to purchase before doing basic research that would reveal the scam for what it is.

Rather than invest in an ambiguous coaching or business-in-a-box opportunity, the FTC recommends using legitimate Small Business Administration (SBA) resources for Internet entrepreneurs. Among the other lessons from the SBA: There aren’t any shortcuts to building a successful online business.

Stuffing Envelopes

Envelope stuffing is one of the oldest and simplest work-from-home scams around.

The typical envelope-stuffing scam asks victims to pay a relatively small amount to learn how to make money stuffing and sending envelopes at home. In return, they become part of a rudimentary pyramid scheme: mailing solicitations for the same envelope-stuffing scam to others.

Envelope-stuffing victims usually receive payment only when one of their recipients responds to the offer, which rarely happens. Any revenue generated is unlikely to cover the initial startup fee, let alone postage and mailing costs. The “employer” offering the opportunity doesn’t get a cut, but that’s OK. They’ve already pocketed the startup fee, and they continue to advertise through low-cost online channels like Craigslist or spam email.

A popular variant on this scam does deal the employer in by co-opting victims to promote their products or services. In such cases, the content of the envelope is just an ad for whatever the employer is selling.

Forwarding Emails

This scam is a digital version of the old-school envelope-stuffing scam.

Often delivered by email, the initial pitch advertises easy money through a vaguely defined opportunity involving email marketing. To get started, the victim must pay upfront for educational materials or software that the scammer claims are essential to the job.

In some cases, the scammer simply pockets victims’ money and disappears. In others, they send useless material, often little more than an expanded version of the initial pitch with instructions to forward it to everyone in your address book. If any software is involved, it could be worse than useless. These scams are sometimes vectors for malicious spyware or adware that can impact your computer’s performance or facilitate identity theft.

Forwarding Packages

This scam seems simple enough. All the participant must do is respond to the offer with their address, wait for a package to arrive from Amazon or some other online retailer, and forward the package to a third address (covering shipping costs, of course).

The scam itself is simple. It could also put participants in legal jeopardy. That’s because package-forwarding victims often act as fronts for identity thieves attempting to conceal their true identities and location. The scammer uses stolen credit card or bank account information to purchase the packages, then sends them to unsuspecting victims’ addresses to throw law enforcement off their trail. Unless the scammer is really foolish, they use a public address, such as a UPS Store, to pick up their packages — leaving victims in legal hot water.

Cashing Checks & Wiring Money

Check-cashing scams are also simple and can have potentially devastating consequences for victims.

One of the most common variations is the international payment processing scam, which asks the victim to open a bank account, cash fake checks on behalf of international clients, and wire most of the payment (less a processing fee for the victim) to a third party. When the bank discovers the check is a fake, the victim is left holding the bag legally and financially.

Not all check-cashing scams involve work-from-home opportunities. Check scammers also prey on:

  • People seeking roommates by sending fake checks to cover the security deposit or first month’s rent and asking the victim to wire funds for “moving expenses”
  • Lottery or sweepstakes scams with fake checks for lump-sum prize payments and requests to wire payment for fees and taxes
  • People selling things on sites like eBay and Craigslist by sending a phony check worth more than the total selling price and asking the victim to wire the difference

In-Home Manufacturing & Assembly

So-called craft scams seem like an enticing proposition for people who enjoy working with their hands.

They’re not. They’re a waste of time, money, or both.

Craft scammers ask victims to pay hundreds of dollars (and sometimes more) for specialized assembly equipment, such as top-of-the-line sewing machines or printing contraptions, and the “high-quality” supplies needed to produce the advertised crafts. In exchange, they promise handsome pay for each completed piece.

Some craft scammers simply pocket victims’ payments and move on, never bothering to send equipment and supplies that don’t actually exist. Others do make good on the initial promise, though the actual cost of whatever they send is liable to be much lower than the victim’s upfront payment. Moving forward, they reject completed crafts on the grounds they don’t meet exacting quality standards, wasting hours of the victim’s valuable time before the victim finally gets wise.

Medical Billing

Some people really do have stable careers as work-from-home medical billing professionals, but competition for work in this field is fierce, and scams outnumber legitimate jobs. No matter how enticing the opportunity sounds, tread cautiously.

Illegitimate medical billing opportunities typically ask victims to pay upfront for pricey software, training materials, or lead lists they claim are essential. But the material’s collective value is vastly overinflated. The software itself might not even work as advertised, and the lead lists might be publicly available rosters of hospitals and clinics rather than targeted lists of medical practitioners who’ve expressed interest in billing services, among other common problems.

Data Entry

Data entry is another sometimes-legitimate work-from-home job that’s often fraudulent (or misleading, at minimum).

Illegitimate data entry opportunities often resemble fraudulent medical billing opportunities, with pricey software that doesn’t work and training materials that don’t say anything new. Real data entry jobs don’t require upfront payment — the company provides the software for free — and typically involve company-provided rather than self-directed training.

Mystery Shopping

Mystery shopping can sometimes produce a net profit for participants. That said, even truly legitimate mystery shopping opportunities demand exceptional organizational skills and extreme diligence. Few pay well. Most require participants to leave their homes and visit brick-and-mortar retailers, restaurants, and professional offices.

And many are just scams — they serve as fronts for fake check scammers. The scammer sends a check upfront to cover the victim’s shopping costs on the condition that they return the merchandise and wire back the remaining balance (less the victim’s shopping fee). In other cases, shady mystery shopping companies ask new shoppers to pay upfront for worthless training materials and promise work that never materializes.

Multilevel Marketing Schemes

Like mystery shopping and medical billing, multilevel marketing schemes (MLMs) can be profitable. But they’re often misleading and exploitative, putting later arrivals (those on the lowest levels of the scheme) at a considerable disadvantage. And the line between legitimate (if potentially exploitative) MLMs and outright pyramid schemes can be subtle. It’s wise to avoid any MLM that emphasizes recruiting new “subs” — people lower on the ladder — over selling actual products.

Red Flags of Work-From-Home Scams

Female Hands Counting Money Cash

Use these tips to assess every work-from-home offer that crosses your desk. While there are many variations on work-from-home scams, they often have several potential red flags in common.

You Must Make an Upfront Investment or Provide Payment Information

Work-from-home opportunities that require participants to pay upfront for anything — supplies, equipment, software, training materials, or anything else — are almost always illegitimate. Legitimate MLMs are a qualified exception, provided the opportunity’s sponsor can clearly and in detail demonstrate how the endeavor generates income.

Otherwise, work-from-home jobs that require upfront investments are at best conduits for fraudsters to sell vastly overinflated products or knowledge. At worst, they’re fronts for criminals looking for credit card numbers to steal.

The Offer Makes Wild Claims About Passive Income Potential

Be skeptical of any offer that’s heavy on promises of outsize passive income with minimal work and short on specifics about what’s needed to achieve that result. Dreamy stock photos of “employees” relaxing on a Tahitian beach or crushing Swiss powder tell you nothing about the job at hand, the reality of which is infinitely less glamorous — if it exists at all.

The Company Is Based Overseas

Legitimate job opportunities don’t stop at the water’s edge. Some of the world’s most employee-friendly companies are based overseas. Some lack any American presence at all.

But legitimate international employers generally follow the same hiring practices as legitimate employers in the United States. Coupled with any other red flags, an international mailing address or phone number is a signal to tread cautiously. U.S. law enforcement authorities are even less likely to hold small-time fraudsters based overseas accountable for their actions than domestic crooks — many of whom take advantage of others for years without facing justice.

The Company Won’t Answer Basic Questions About the Job or Compensation

Legitimate job descriptions can be vague too. The difference is that legitimate employers are willing and able to provide detailed answers to basic questions about the organization’s structure, the scope of work, how employees or participants earn money, the likely amount of any compensation, the length and terms of any probationary period, and any other details candidates want to know before accepting a job offer.

When asking for more information about a job, be especially stubborn about the onboarding process and any costs you must bear. Again, any requirement of upfront out-of-pocket payment is a giant red flag, but excessive paycheck deductions for supplies or company expenses also warrant scrutiny.

The Only Interview Occurs by Email or Social Media Chat

Be wary of employers resistant to showing their faces (or voices) to job candidates. By itself, an employer’s refusal to conduct video or phone interviews isn’t definitive proof of a scam, but it strongly suggests that the employer prefers to remain anonymous. The person hiding behind a random email address or social media chat handle could be anyone.

Qualifying Opportunities Fail to Follow the FTC’s Business Opportunity Rule

Under FTC regulations, the sponsor of any qualifying business opportunity advertised to prospects in the United States must do two things upon request:

  • Issue a disclosure that identifies the sponsor, discloses any lawsuits or legal actions against the sponsor, spells out the cancellation or refund policy (if any), provides references, and discloses whether the sponsor makes any specific earnings claims about the opportunity.
  • Issue a separate earnings claim statement if the opportunity makes any specific earnings claim. This statement must spell out the time frame during which the claimed earnings occurred and the percentage of participants achieving those results, among other details.

The FTC’s Bogus Business Opportunities guide provides more detail on sponsors’ obligations and recourse for prospects who believe they’ve been scammed.

Research Using Trusted Sources Turns Up Little Information (Or Negative Information) About the Company

Never agree to participate in a work-from-home opportunity without using trusted sources to research its sponsor. These include but aren’t limited to:

  • The Better Business Bureau, which compiles information (including customer complaints) about registered businesses and provides letter-grade ratings based on past complaint patterns
  • The Federal Trade Commission, which maintains the Consumer Sentinel Network
  • State consumer regulators and attorneys general offices, which often publish information about enforcement actions against fraudsters with local victims
  • Local and national media reports accessed through Google News and similar tools
  • Complaints on consumer websites like Yelp, keeping in mind that not all complaints are accurate and plenty of folks have an ax to grind online

An absence of consumer complaints or adverse actions against a work-from-home opportunity sponsor doesn’t necessarily mean it’s on the up and up. It could simply be a new fly-by-night opportunity that hasn’t been around long enough to attract scrutiny.

The Job Doesn’t Appear on Legitimate Job Boards

A work-from-home opportunity’s appearance on legitimate job boards like Flexjobs, Indeed and Monster is not a guarantee the opportunity itself is legitimate. Clever scammers willing to pay for placement can advertise anywhere they want. That said, jobs that have other red flags and appear only on more freewheeling sites like Reddit or Craigslist — or through low-cost channels like spam email and paid search ads — are significantly more likely to be scams.

Final Word

This list of common work-from-home scams includes several opportunities that are almost always fraudulent, such as check forwarding and in-home assembly.

It also includes opportunities that occupy a broad gray area between truly legitimate and fully fraudulent. Some mystery shopping and medical billing jobs are profitable. Those at the higher rungs of multilevel marketing schemes often do quite well for themselves.

Other opportunities not mentioned here hold out supplemental earning potential for workers confined to their homes, such as completing online surveys through Survey Junkie and participating in digital focus groups or product testing panels. Since many of these opportunities are legitimate, it’s not fair to color them as scams. But anyone thinking about pursuing them must understand they can’t get rich doing so.

In fact, that’s good advice for anyone considering any opportunity to earn extra income. The fact that you can supplement your income doing something doesn’t make it worth your time.

Have you run across any of these work-from-home scams? How did you spot them?

Brian Martucci
Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he's not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.

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