Home Business Scam
Home business scams have existed for a long time and have taken a new form with opportunities through the internet. Some of the classic home business scams include envelope stuffing, chain letters, pyramid schemes, multilevel marketing, etc. All of these are now done online by email and scam websites. Most of these scams are get rich immediately schemes which ask the victim to pay money to get started.
One of the most common scams seen on the internet in the recent days is "Drop shipment scam".
What is drop shipment?
Drop shipment or drop shipping is a type of retailing where the retailer does not keep goods in stock, but instead passes the customer's order and shipment details to the wholesaler, who then dispatches the goods to the customer directly. The retailer makes their profit on the difference between the wholesale and retail price.
The drop shipment scam
Con artists sell whole sale drop shipper lists on the internet through websites and online auctions. The list gives names of companies which drop ship and many of the companies could be the same company in different names or just an individual with a phone without any actual product who uses another drop shipper list to ship products (a victim of the scam).
Victims after paying for the drop shipper list need to do a lot of work and do not make the money they were promised and in fact are helping the actual drop shippers make huge profits. The drop shippers price their items extremely high with very little or no profit for the retailer. Also most drop shippers charge a membership fee to access their price list. Victims need to try to sell these products in various online auctions or advertise on the internet at their own expense, eventually losing money. The whole idea is that drop shippers can sell their poor products without any advertising, make huge profits, not be held responsible for their bad products and get money from victims as membership fees (and some have yearly membership contracts too). Not all drop shippers are scammers, so choose your drop shippers carefully!
Guidelines to protect yourself from home business scams
Don't pay money to get a job. Never pay money to any company which promises to employ you to work at home.
Don't believe in immediate big profits the easy way. Home-based business is just like any other business; it requires hard work, skill, advertising, good products or services, and time to make a profit.
Avoid responding to unsolicited emails promising work at home opportunities. Many unsolicited emails are fraudulent and promise easy money only to trap you.
Research and decide. Find out everything you need to know about work at home. Research on companies you will be dealing with and find out about their agreement. Take your own time to decide.
Ask other people who work at home. Ask them if the company kept its promises.
Know the refund policy. If you have to buy equipment or supplies, ask whether and under what circumstances you can return them for a refund.
Understand your legal requirements. Some types of work cannot be done at home under federal law. Look for the nearest U.S. Department of Labor in the government listings of your phone book and get information.
Too good to be true. If something appears to be too good to be true, then it probably is.