The perils of home work

Want to earn money working from home? How about answering this: "Free info pack. Work from home, extra income." A web address is provided. How easy is that? You don't even have to make a phone call.

The advertisement, published in an Auckland regional paper this month, is just one example of dozens of work-from-home schemes on offer - some genuine and some not.

Earlier this month, Rotorua woman Lee Fettes told how she was scammed by iNetSeminars, a United States-based company selling internet marketing techniques to people who want to work from home.

According to news reports, Fettes attended an iNetSeminars seminar, was given a free meal and asked to pay for a second seminar to learn more. She paid $50 but didn't attend again after learning the firm is being investigated in New Zealand and has faced prosecution in the United States.

"I was quite impressed on the night because the people were very professional and they didn't make it sound as though what they were offering was too good to be true," said Fettes.

Stuart Wallace, fair trading manager for the Christchurch office of the Commerce Commission, says the commission has received seven complaints about work-from-home scams this year.

"Mostly these involve an upfront payment, and, following the payment of that sum, the victim finds that the returns from the scheme are not as great as represented or simply that the scheme is a scam," says Wallace.

He says recourse is difficult if the scheme is based overseas.

"If the country where the scheme is based is one where there are reasonable standards of consumer protection, they could lay a complaint with the appropriate agency," he says.

In New Zealand, the Commerce Commission can take action through the courts or the Disputes Tribunal.

"In practice, [getting] compensation can be difficult and people would be well advised to get advice about the scheme before investing in it," says Wallace.

Examples of work-from-home scams include letterbox flyers promoting work stuffing envelopes. People are asked to send money but no work or reply is received. Another scam has people paying money for materials to make gifts from home or grow flowers for export. After investing, they're told they have to sell the goods themselves.

Heather Douglas, managing director for Home Business New Zealand which provides advice to home businesses, says the kind of people who fall for scams are often those who want something dropped into their laps.

"There is a difference between people who want to genuinely work a home business and those who just want to earn money as an employee," she says.

Douglas says work-from-home schemes fit into two types; legal multi-level marketing (MLM) schemes that are hierarchical sellers of product, and scams, which are illegal and difficult to prosecute.

"Additionally, some [MLM] schemes are more legitimate than others and should be checked out," she says.

David Russell, chief executive for the Consumers Institute of New Zealand, says work-from-home scams follow familiar patterns.

"There's usually an emphasis on the work being easy and quick. The devices can range from piecework through to the stuffing of envelopes," he says.

Russell says the popularity of the internet makes it easier for scammers.

"In the old days scammers had to go door to door. Then they moved to telemarketing and classified advertising. Finally, they're on the internet where they can be invisible. The worrying aspect is the ubiquity of the internet and the fact it is global," he says.

It's an important point because websites allow scammers and questionable schemes to remain anonymous while gleaning personal information and payments from their victims. Such sites typically feature excitable language, well-worn quotes from famous successful people and guilt trips ("wouldn't you like to spend more time with your children?"). Rather like a computer game, they also have multiple screening levels designed to draw people in without having to reveal too much about the proposed "business".

While many people can't understand how others can be so gullible, Russell says financial desperation is often reeled in.

"Scams prey on people who are desperate and who have little other prospect of earning money," he says.

Examples include the unemployed, elderly, solo parents and new migrants who speak little English. But they can also be financially comfortably off and looking for a challenge; or simply want to generate extra income for a family holiday.

Douglas says people need to remember one rule. "If you are asked to part with money without specifically understanding what you are doing and what you will gain from it, then you should always question that," she warns.

The big sell

Ever wondered how easy it is to get drawn into a legitimate multi-level marketing scheme? It's this easy. The newspaper advert that caught my attention was enticing: "Free info pack. Work from home, extra income." A web address is provided.

Level one: I arrive at a website with "testimonials" from people who say they are very happy thanks to Success Connection - apparently run by Justine Robertson from Nelson. I'm not told what Success Connection is but "Jen and Jason from Wellington" are apparently very excited.

Level two: To find out more, I am required to enter my name, phone number and email address (an action I later regret).

Level three: I am presented with my "free infopack", an internet-based slidedshow promoting the benefits of home-based work. There is also this note: "Do not be frustrated by the fact this infopack may not have all of the information about our business, this is deliberately done as part of the screening process."

Level four: Ah-hah. If I buy a "decision pack" for $44 including postage I will "learn exactly what Success Connection does, how it works and what it offers". There's a "no-risk" 30 day money-back guarantee. Only thing is, I have no idea who is providing the guarantee.

Level five: As I exit the website a pop-up window screams, "Attention! Never leave a stone unturned in your search for a better future ... explore this opportunity and learn all you can learn!"

Level six: Through research I find out that Success Connection is a marketing front for dietary product Herbalife of "Want to lose weight now? Ask me how!" fame. The next day Justine from Nelson phones me at 8pm. I tell her I am not interested, but she still sends me an automated email a day. So far I have had four.

* While Herbalife is not a scam job, the marketing of this "opportunity" is questionable and I wonder why Success Connection isn't able to say on the front page of its website that the job it is promoting is Herbalife.

Work from home scam-free

If you are responding to a work-from-home advertisement:

* Check out the company online (use the word "scam" or "MLM scheme" along with the company name in your online research). Debates and information are best found in online forums and chat room comments.

* Make sure there is a physical (street) contact address provided for the company.

* Don't read only what you want to see; be suspicious.

* If you are invited to discuss a marvellous work-from-home opportunity, demand to know exactly what the work will be, and for which organisation before parting with any money or attending a dinner or meeting. Once you get the gist, research the business before committing or attending.

* If you can't find out what the business is without parting with personal information or money, it is likely to be a scam or a scheme that makes you little money. Proponents of sound business ideas do not need to withhold information or demand up-front payment. 


www.consumer.org.nz

www.comcom.govt.nz