Sunday, September 03, 2000

Be suspicious of work-at-home offers

There are potential pitfalls everywhere, and the only people making money are the ones offering the work

By Linda Lipp
Knight Ridder News Service

        FORT WAYNE, Ind. — We've all seen and heard the ads for work-at-home businesses that promise people they can earn thousands of dollars, in little time, with no previous training or experience, by simply:

        a) Investing in real estate.

        b) Placing inexpensive classified ads that will sell tons of merchandise.

        c) Stuffing envelopes.

        d) Doing easy handcrafts the company will sell for you.

  Beware of work-at-home plans that require you to pay to participate, or to purchase inventory or supplies upfront.
  Avoid plans that promise to pay you a commission for recruiting other people, or a commission on sales made by the people you recruit.
  Don't believe plans that promise big financial returns with no investment and little or no work.
  Check out work-at-home programs and/or report suspected fraud by contacting the Federal Trade Commission's National Fraud Information Center at (800) 876-7060.
        e) Selling merchandise on the Internet and recruiting others to sell for you.

        The answer, sadly, is almost always none of the above. Easy-money, get-rich-quick schemes generally make no one rich but the person selling them.

        “All of the Better Business Bureaus worked with the postal inspectors for six months looking at these,” said Tom Bartholomy, president of the northeast Indiana BBB.

        “They found one that was legitimate. That's one out of thousands,” he said.

        Year after year, work-at-home schemes generate more inquiries to the BBB than anything else, Mr. Bartholomy said. Their advertising makes them sound so easy, so reasonable and so do-able that many people are taken in.

        Typically, they also target those who desperately want or need to work at home — people who are elderly and on fixed incomes, the disabled, stay-at-home parents or individuals in a lower-income bracket who could use a second source of income.

        Infomercials are a popular advertising vehicle for work-at-home packages, but others are sold through ads in publications, by mass mailings or faxes, over the Internet or on signs posted on utility poles and community bulletin boards.

        The infomercials typically sell with first-person testimonials — usually offered by a sincere, casually dressed couple lounging beside a pool or at the beach, apparently because they've become so wealthy they no longer have to work for a living. The images make such a strong impression that the tiny “results not typical” disclaimer that speeds across the TV screen once or twice during the long ad goes almost unnoticed.

        “Some of them are extremely effective. One of them had me convinced I was going to make money, and I'm as cynical as they get,” Mr. Bartholomy said.

        That little disclaimer or the tiny kernels of truth contained in the offer may be just enough to keep the company out of hot water with government authorities overwhelmed by other regulatory obligations.

        “It just hasn't been a priority for the FTC (Federal Trade Commission),” Mr. Bartholomy said. “They don't pursue them very aggressively on a national basis.”

        The most common schemes make money for their promoters by requiring individuals to make an initial purchase of materials, a mailing list or other information. The price may be as low as $30.

        “You have to keep it low enough to get a lot of people to buy it,” said Terri Worman, Midwest region community representative for the American Association of Retired Persons.

        That required purchase should be the first red flag, Mr. Bartholomy said.

        “The basic rule of thumb is that if you have to pay them to participate, it's a bad idea,” he said.

        Also be wary of programs that make outrageous promises regarding earning potential, Ms. Worman advised.

        “They'll say you can make $2 to $3 per envelope for stuffing envelopes,” Ms. Worman said. “No one's paying that. It just doesn't fly.”

        The quality of the information itself is suspect, Ms. Worman said. The address, e-mail or phone lists may be old, and if they are sold thousands of times over, the individual buyer gains no real advantage through their purchase.

        Marna Bixler of Fort Wayne, Ind., paid $39 to participate in a letter-stuffing program sold by a now-defunct California company. Instead of being paid to stuff envelopes, however, Ms. Bixler found what the company really wanted her to do was post signs in stores and laundries recruiting other people to buy the program.

        “I just wouldn't do that,” she said.

        Ms. Bixler tried to get her money back, and eventually filed a complaint with the Better Business Bureau, but the company had pulled up stakes and moved on.

        “I just don't believe those ads anymore,” Ms. Bixler said. “As much as I wanted the part-time work, I think it's just one of those deals you better stay away from.”

        Another popular type of work-at-home program sells materials so people can do craft work. But consumers should realize the company doesn't make its money by selling the completed crafts, it makes money by selling the materials to make them.

        “Inevitably, they reject what you do as not good enough,” Mr. Bartholomy said.

        Some of the most attractive-sounding programs, in terms of earnings potential, are pegged as “multilevel marketing plans” that offer commissions not only for sales you make but for sales made by the other people you recruit to join.

        “That's nothing more than a pyramid scheme,” Ms. Worman said.

        The Internet is rife with schemes that promise “six-figure income potential,” “exclusive marketing rights” and “management bonuses,” all with little or no investment.

        “Join today and be a part of the next dot-com explosion,” one ad faxed to The News-Sentinel read.

        These offers, like every pyramid scheme, require a constant influx of new participants. Only a few people at the top ever make any money, and “eventually, they all collapse,” Ms. Worman said.

        So why are people taken in? Because the high-profile, legitimate companies such as and e-Bay that have made millionaires of some stock market investors make Internet riches seem possible.

        While many publications routinely run ads for work-at-home businesses, other newspapers ban the ads unless the company can provide a written pay schedule, is an established business and a member of the BBB.

        But the proliferation of schemes involving the Internet is making work-at-home advertising harder to police, said Fort Wayne Newspapers advertising director Lisa Goodman. An advertisement for a seminar on work-at-home Internet business opportunities, for example, recently made it into the newspapers.

        “Technically, since it's for a seminar, it meets our guidelines ... but it kind of sends a signal on the radar,” Ms. Goodman said. “We probably need to take a look at expanding our acceptability guidelines.”

        Although the Internet has opened up many work-at-home opportunities, most are not found on infomercials or in newspaper advertisements, Mr. Bartholomy said.

        “The ones that are legitimate you'll normally find through your own employers.”

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