So how do you spot a scam? Well, it’s not always easy. Many scam artists have gotten quite good at what they do (unfortunately) and thus many of their pitches sound very sincere and genuine.
General “Opportunities” to avoid (because they may be scams):Anything that doesn’t specify what you’ll be doing. Think about it: if what you’ll be doing is really fun, exciting, and fulfilling, wouldn’t they want to tell you all about it right upfront? If they’re not saying what it is, it’s probably illegal, unfulfilling, or it just plain doesn’t exist. Many of the sales letters offering these types of scams tell you what the opportunity is NOT. For example, it’s NOT MLM, Mail Order, or Real Estate Investing. But they never tell you what it IS. Be careful if you’re asked to put money down for an opportunity that doesn’t tell you exactly how you’ll be making money.
Anything that requires you to pay a good chunk of cash (at least several hundred dollars) up-front with little explanation of why this is necessary other than a vague claim that it’s for some type of supplies or a kit. You always want to know exactly what you’re getting into before investing. If it isn’t clear and the company won’t answer your questions, steer clear. Good, strong companies who want you to succeed will tell you exactly what you’re getting into – and what your money is going for.
Any opportunity where you can’t contact the company, either by phone, fax, or email, is probably not a good opportunity to join. After all, once you invest in their opportunity, how are you supposed to get your questions answered? Stay away from companies that are happy to take your money, but not eager to answer your questions.
Many of these con artists focus on getting you excited through earning potential, success stories and testimonials of other people making money (which could be completely made up), and promises of easy money with little or no work. They hold back on giving you any real information and just flash a bunch of money in front of you, tell you some “success stories” about made-up people who made insane amounts of money, and stress that those people are just like you.
What they’re trying to do is get your greed glands going and whip you into an enthusiastic frenzy so that you’re predisposed to buy whatever it is they’re selling, regardless of how sleazy the company is or what they’re having you do. I know... It’s shameless, but it happens.
Now let’s be really honest here. I have greed glands. I’m guessing you do too. We’re human beings. Without these greed glands, you wouldn’t be motivated to start your own business and reach financial freedom. Wanting money isn’t particularly a bad thing. However, con artists can use that desire for financial freedom against you. And the worse if you want (or even need) additional money, the easier it is for the con artists to prey on you. When your desire is high, you may tend to ignore the warning signs, tell yourself “what if this really works like they say it will”, and... WHAMMO... you’re hooked.
This has happened to me more than once. But I don’t beat myself up about it. I just learn from it and move on. So if you do get hooked and ripped off, don’t let that stop you. Simply pick yourself up, dust yourself off, and learn from the experience.
So what do scams look like? It’s difficult to say, since they’re all different. However, there are a few hallmarks they have in common. Think of these as distinguishing characteristics. Common Characteristics of Scams
• Offering you a work-at-home “job” – where you’re supposedly paid a salary or hourly wage from a company while “working from home”. While some companies do offer “telecommuting”, most of these companies don’t advertise that fact through home-business books or directories. Be very careful when you see a book or directory promising work-at-home “jobs” or “employment”.
• “Home Assembly” offers – where you’ll be paid for assembling crafts or gifts in your spare time with materials supplied for you. Many of these home assembly offers charge you a fee to start and then refuse to pay you for the items you’ve assembled. The company makes money selling you their $30 to $40 start-up kits.
• Envelope stuffing or coupon clipping. These “opportunities” are made to sound like you can pocket huge sums of money doing something incredibly simple. After all, most people can “clip a coupon” or “stuff an envelope”. However, there is always a “catch” that isn’t explained in the ad. You end up paying $30 or so for a “system” that is unworkable or includes a lot more work than just stuffing envelopes or clipping coupons.
• Guaranteed income (“You’ll make $60,000/month—GUARANTEED!”) No company can guarantee how much money you’ll make, because no one can control how much work you’ll do or what actions you’ll take. However, most people are looking for some sort of guarantee, so these types of offers are very appealing.
• Products that “sell themselves” (so why doesn’t the company just put the product out on their front lawn with a salesman to take orders from people who walk by?) No products sell themselves. Other “lures” are products or services that “everyone needs” or “everyone will want.” That’s rare. And even with these types of products, they still have to be marketed. The “everyone will want that” pitch makes it sound like you can make money with virtually no work. It just isn’t the case.
• Pressure to make a decision or commit right now or on the spot. If an opportunity is a good opportunity, it’ll be around tomorrow, next week, and next month. Don’t be pushed into an opportunity because “time is running out.” If it’s a good decision today, it’ll be a good decision next month, too.
• Income earnings that sound too good to be true. Do people make large sums of money? You bet! During one of my best months in business, I generated over $200,000 in gross sales. However, that was after many years of trial and error and lots of effort. So be careful if someone promises you huge sums of money in a very short period of time. And the bigger the amount, the more skeptical you’ll need to be.
• You are discouraged from taking time to read a contract or let an attorney review it (scam artists are like vampires—they function best in the dark). If you have to sign a legal document to join a business opportunity, always – without exception – have an experienced attorney review it for you.
• They give you all sorts of excuses when you ask to speak with other investors or previous investors. A good company that delivers a high-quality opportunity that works will want you to contact their other investors or dealers. Be wary of any company that either won’t let you contact their dealers or can’t give you a good reason why they won’t.
• No one ever answers the phone and the company address is a P.O. Box. Many fly-by-night companies set up shop through a post office box or mail drop service.• You’re given testimonials with initials only. One problem with spotting scams is that con artists are willing to lie through their teeth to get your money. This means that they might be willing to make up testimonials for their opportunity, which is totally illegal. However, if they don’t have testimonials or the testimonials have only initials, then be cautious. Good testimonials give the customer’s first and last name plus their city and state.
• You get that sick feeling in the pit of your stomach that something about this whole deal feels wrong somehow. Yes, your intuition is normally right. It’s happened to me a time or two. One part of me wants to jump on the bandwagon but there’s a gnawing feeling inside my gut that tells me to “stay away” from the opportunity. In almost all cases, the gnawing feeling in my gut was right. If you’re not certain about an opportunity, there’s no harm in avoiding it. Again, if it’s a good decision today, it’ll be a good decision tomorrow after you’ve done more research.
• You get the feeling that the company is most interested in selling you the opportunity or franchise and not in adding a quality person to their company.• Claims you’ll make a lot for doing very little, or that you won’t have to sell anything. I’m guessing that most people would like “money for nothing,” like winning the lottery. Well, the con artists know this so they make their opportunity sound as “hands-off” as possible. You do little or no work. You don’t do any selling. You don’t talk to anyone. You don’t lift a finger. You do nothing and the money comes rolling in. My friend, if there was such a business, I guarantee the millionaire entrepreneurs would know about it first and they’d all be doing it instead of doing what they’re doing now (building strong businesses with long-term income).
• You have to buy a lot of costly inventory. I personally believe that you don’t want to get into any opportunity that demands that you buy a bunch of inventory before you’ve had a chance to promote the product. Normally, in these situations, you end up with a garage full of lotions, potions, or other such stuff you can’t sell and the company that sold it to you is getting rich. NOT through the sales of the products, but by forcing their dealers to buy inventory up-front.
• There’s no agreement to buy back any of your unsold inventory (if it’s such hot stuff and it will sell so easily, why won’t they buy it back?) Again, I wouldn’t get involved with a company that requires that you purchase a lot of inventory right off the bat. But if you do, they should have some sort of “buy back” agreement. If not, that’s a warning sign.
• Fake or Misleading Guarantees. For example, if the guarantee says, “Give our system a try... and if, after trying it, it doesn’t make you $100,000 in cash, simply send it back and we’ll refund every penny you paid, no questions asked”. Sounds okay, right? Actually, the guarantee states that you have to try their system before you can get a refund. And, if they haven’t told you what the system is before you purchase it, you might find that trying their system is more costly than the price of the system you’re buying. For example, one time I bought a system that taught me how to make money running full-page ads in magazines to generate sales. The only way I could get a refund on the $40 system was if I sent them a copy of the magazine with the full-page ad in it. That ad would have cost me $4,000. So to get back my $40, I would have had to spend $4,000! Plus, by the time my ad would have run, the company was already out of business and had moved onto some other post office box to start this scam all over again.