Avoid The Scams

What makes a scam?

Start by asking if it's legal and look closely. For example, MLM (aka: Network Marketing) programs are legal, but pyramid scams aren't. If the company is publically owned it's probably legal. If it says you don't have to work, then it probably is a scam. Top MLM companies are in good standing with the Attorney Generals of all 50 states, just like any other good company.

If it costs nothing to join, such as an affiliate program or free MLM, but promises lots of money, then look very carefully. How can it pay if everyone joins for free? If it promises money for moving their products, such as Amazon.com, and you get paid for moving products, then it's probably cool.

Note that 90% of all new businesses go out of business within a couple of years. Did they lose money? Yes. Were they scams? No. Did someone fail at their business plan? Probably.

So what do you do? Good Question!

• You won't go to work for a company without getting trained. They won't hire you without intending to train you. They won't pay you if you don't do the work. Ask and expect the same of any money-making program or business you join. If it helps, think of it as a sales position that pays commission only.
• If you're told that it's easy, that you'll make a million dollars in a week, that you'll make a ton of money by placing a banner on your website, then look elsewhere.
• Tip: in any affiliate, network marketing, or home business program there really are people making real money and there are people who are going to make real money. Find one of these people and you'll get a ton of great help and information. All you have to do is join, pay attention, learn well, and work hard. Just like Corey Rudl did. You just might find yourself in a position to fire your boss.
• Check out what CBS Marketwatch has to say about home based businesses.

Phishing

This little scam is one of the favorite methods of identity theft today. You receive an email from some bank informing you that for security reasons you are required to enter all of your vital details, including your social security number.

No real bank will ever send such an email.

If you hold your mouse curser over the link in the email and look at the bottom of your email window you will see the real page that you're being sent to. It's probably a long line of gibberish. And it's probably not your bank, anyway.

If you're really concerned that it might be real you should pick up the phone and call the bank directly.

A similar scam involves receiving an email from Ebay.com regarding a disputed transaction.

The newest browsers are starting to incorporate phishing protection, as do some anti-spyware programs. These might be worth looking into.

Sending Money to Many People

One common scam has several variants -- but all of them involve sending money to several other people. Sometimes the premise is to join a mailing list; other times it is to send recipes/information. The new thing is to call the money you are sending "investments" or "As seen on National TV". They are ALL scams. All of these plans have the following drawbacks:

• They get your internet account closed
• They depend on a pyramid scheme
• They usually cause you to lose money
• They are barely legal (if at all)
• They waste yours - and everyone else's time

These ploys seem logical at times -- like, "hey, this should make me money". But they do not do so. All the plans require that several thousand others will do the same as you did. If everyone is using the same mailing lists, they will have already seen the same offers. They will not buy it.

Out of curiosity I tried one of these several years ago. I used physical mail. I LOST money. The people selling addresses probably made money -- but I did NOT. Here's a way to check: what happens to the cash flow if no one else joins? If it's a scam it'll collapse immediately.

Envelope Stuffing

Ads about envelope stuffing generally require you to do a mailing with your own addresses, and get a certain percentage of bought items. For example, if you mail out 100 envelopes, to be paid your 25 cents per envelope, you need to have 4 people buy the product you are promoting. Often YOU have to up front the mailing costs as well. Other times, you have to pay a fee to join the program -- and your application is denied -- so you pay for nothing. Questions to ask:

• Do you provide mailing addresses and labels?
• Do you pay mailing costs -- and when?
• How do I get paid?
• When do I get paid?
• Do people have to buy the product for me to get paid?
• Do I have to place or post ads to get addresses?
• How much do I have to pay to do this? If you have to pay, don't do it, but keep in mind that money has to flow into the company for anyone to get paid. If your expenses seem like a reasonable overhead and you know exactly how you get paid then it might be Ok.
• Alternately, are you going to be stuffing envelopes saying how to duplicate the scandal (send $20 to be able to stuff envelopes?) As always, look closely, then look again.

One person said to be wary of: Mesa, Inc in Miami, FL as they lost their money. There are a few legal companies out there -- but they are few and far between.

Nigerian Scam & Lottery Winnings

One gets a confidential letter from the desk of some African official. They have urgent and very confidential business proposition for you. They need to get money out of the country or to their niece or to someone who recently died. Alternately, they quote a supposedly Nigerian law that states they must get the money out of the country and a good deal of it will go to you.

Another common email is the "You've Won!" scam. Some lottery, somewhere, often in the UK, claims that you've won their grand prize. All you have to do it give them all your personal details...

Of course, this confidential letter is sent to a few million people. The catch is that you must put up some fees for this money. You send them money and more money and more money -- and you never get anything from it. This is a well known scam.

Questions you should ask when you get this sort of mail:

• How fast can I delete it?
• Why should they be contacting you? (Do you know this person?)
• Why does it need to be so confidential?
• Is it legal?
• Does it make sense?

A better question to ask about these scams in particular is: How can I set up my email filters to catch these pieces of SPAM so that I never see them again?

Be careful with your money. If you really want to know whether something is legal, do your homework.

MLM, Network Marketing

There are many MLM (multi-level marketing) opportunities. Some of them seem to claim that you can get rich quick or quit your day job or get paid for doing nothing. Legitimate companies never claim this, though the people working the programs might. It used to be that unless you are a super salesman and don't care about losing friends, you wouldn't make much money. This is no longer true, but you still have to work and learn. You wouldn't go into a new job without expecting to be trained, so hold the same expectation for an MLM.

If you bought a franchise you're have certain realistic expectations. Have the same for MLMs.

Here is some general advice to consider before joining an MLM:

• Is the product sound? Is it a real product or a cheap knock-off?
• Would you buy the product, if you were interested in that type of product? For example, if you're not into vitamins you're not going to buy the product, regardless.
• Does the product compare favorably with store products (price, quality, etc)? If it's a higher price then the quality, or something else, should justify the higher price.
• Can you make money WITHOUT having anyone join up under you? You do this by getting customers.
• Free to join is actually not a good criteria for an MLM, but the free one's are lot's easier on the pocketbook. Of course, if everyone joins for free then who's buying anything? Where's the cashflow?
• Most people do Network Marketing everyday, but the just don't get paid for it. Ever recommend a movie, CD, store, or whatever to someone? Then you were network marketing for those companies. You just didn't get paid for it.
• If you are hoping to replace your day job you will need to talk to alot of people. Do you like to talk to people about products you like? Are you willing to hear a lot of people say, "no," to get to the few who will say, "yes?" It can be fun. If you don't want to hear "No" twenty times for every "Yes," then you should consider something else.

How much money can you make? If someone tells you some really high figure in a really short period of time, then go somewhere else far away from him (her.) Ask yourself this, "How much would I make, how soon, if I opened up my own franchise business?"

The old, dead thinking goes like this, generally, to get riches in traditional MLMs, you will be spending 80 hours a week, alienating many many people, and barely making money for a long, long time. Then you MAY make some reasonable money or more likely, be broke. The new thinking is this, I'm going to do my homework (just like choosing my next job,) I'm going to join something I believe in, I'm going to learn the system,and I'm going to pick the brains of the people making money,and I'm going to work!

Although, theoretically, you have a huge team of people working for you, unless they either buy or sell product it does not help. This is the problem with free MLMs. Everyone joins for free, so there's zero cash flow and no one gets paid. If your MLM has a really nice product and you have a group of people who also like the product, then you'll get paid each month as they re-order each month.

Losing Your Purse or Wallet

Identity theft is always a concern. If you lose your purse or wallet then there are a few steps you have to follow.

Cancel your credit cards immediately (keeping copies of those 800 numbers helps - but you can always call information if needed)

File a police report immediately in the jurisdiction where it was lost or stolen

Call the three national credit reporting organizations immediately to place a fraud alert on your name and SS#. The alert means any company that checks your credit knows your information was stolen and they need to contact you by telephone to authorize new credit. The numbers are:

• Equifax 1-800 525-6285
• Experian (formerly TRW) 1-888-397-3742
• Trans Union 1-800-680-7289

Call the Social Security Administration fraud line at 1-800-269-0271

Excessive Phone Charges

The 1-876-xxx-xxxx and 1-900-xxx-xxxx phone numbeers in the US have an extra cost per minute charge. That is, there are many phone numbers one can call that cost large amounts of money to call. These phone numbers when residing in the US require a notice saying that there is a cost per minute and certain amount of time to hang up. (This is common knowledge.)

However, in the Carribean, one can have numbers like this, and NOT have to warn consumers. The numbers are dialed like any US phone number (no country code is required). Hence, unless you know WHO you are calling, you may wish to avoid the following area codes: 242, 246, 264, 268, 284, 345, 441, 473, 664, 758, 767, 784, 787, 868, 869, 809. These CAN be legitimate normal phone lines. However, they also CAN have extra pay per minute lines.

Note that 500 and 700 lines are often pay per call numbers as well for adult entertainment.

Book Stapling

The latest scam seems to be a variation of the envelope stuffing scam. This time, it has you staple books. There are heavy duty machines that do this. There are times when someone may hire you to do small specialized jobs, but do you research first. NEVER send money to do get info. Get details first. Do your homework. (see General Advice and Envelope Stuffing.)

Rebates

Most rebates are good -- but I felt I had to write up my own personal bad experiences with one rebate company. This company promises to send out the product and a rebate form. Supposedly, you can then get the product for free (except shipping charges). Here are the things that happened to me:

• Large shipping charges (shipping was more than the product was worth)
• Less valuable/useful product sent
• Customer service not reachable (limited hours despite what web page said, can not contact them directly, go through answering service)

They eventually credited my account since I complained to places that advertised them -- but it was not a good experience. It was waste of time and energy.

I talked to others about another cyber-based rebate company, and their responses were: if you fill out your forms PERFECTLY and keep copies, you will get your rebates in 14 (or more) weeks. If you didn't fill out the form perfectly, good luck. Often the merchandise was much less expensive elsewhere, reconditioned, and shipping was $4.99. Buyer beware.

Note that some companies don't pay because they set up their rebate program poorly, not because they have a cheesy rebate scheme. Many do pay, without fuss, but it always take 6-10 weks or more. Read the fine print and don't buy an item just to get the rebate.

Domain Names

Be careful where you buy or renew them. It seems that some places to buy these names have decided that the names registered/renewed through them BELONG to them -- and if you do business directly with them you are now renting your name from them rather than owning your name. Others will terminate your domain name at any hint of bad behavior, such as suspected spamming.

A place for researching your domain registrations is: DomainNameBuyersGuide

Keep ownership of your domain names - they are valuable! And while you hold them consider building some kind of website under them. With some work you can earn some money, more than enough to pay for your web hosting costs and the cost of the domain name.

General Advice

• If it sounds too good to be true, it most likely is.
• If they ask for money, check the opportunity out as much as you can. Be VERY cautious.
• If they are making claims, try to verify them (ie. if it is about new legislation, see if it has a house or senate bill #)
• NEVER send your credit card info over unsecured email; always verify who you are sending your credit card # to.
• If on the phone, don't press any numbers for them. Some key sequences can let the other person charge your phone bill.
  
  
• Never automatically unpack word docs/mime attachments/executables onto a PC running windows. Email without word docs/mime attachments/executables do NOT contain viruses.
• Avoid market hype. Do your own research.
• Always compare prices. Just because something is on sale doesn't mean it is cheaper.
• Walk out or hang up on high-pressure sales tactics. Don't be forced or pressured into buying something. After all, it's your phone! You can always say, "oops!" and accidentally drop it and disconnect.
• A good line to use is, "Thanks, but this isn't for me," or "Thanks, but I'm not interested." And then you hang up, nicely.
  
  
• Don't rush into a large purchase because the price is only good today. Do you really need it?
• Check to see if the company is licensed or registered at the local or state level.
• Contact your consumer protection office or Better Business Bureau (BBB) for any complaint recorded against the company. Request any consumer information they might have on the type of purchase.
• Be aware of such extra charges as delivery fees, installation charges, service costs, and postage and handling fees. Add them into the total cost. For example - online shopping sites might not charge tax, but they usually do charge shipping.
• Ask about the seller's refund or exchange policy. Read the privacy policy if you're online. Most say something like this, "We reserve the right to provide your name and data to our marketing partners..."
  
  
• Read the warranty. Note what is covered and what is not. Find out what you must do and what the manufacturer or seller must do if there is a problem.
• Don't sign a contract without reading it. Don't sign a contract if there are any blank spaces in it or if you don't understand it. In some states, it is possible to sign away your home to someone else.
• Before buying a product or service, contact your consumer protection office to see if there are automatic cancellation periods for the purchase you are making. In some states, there are cancellation periods for dating clubs, health clubs, and timeshare and campground memberships. Federal law gives you cancellation rights for certain door-to-door sales. Research things before you buy.
  
  
• Only do business over the telephone with companies you know.
• Be suspicious of P.O. Box addresses. They might be mail drops. If you have a complaint, you might have trouble locating the company.
• Do not respond to any prize or gift offer that requires you to pay even a small amount of money.
• Use unit pricing in supermarkets to compare what items cost. Unit pricing allows you to compare the price ounce-for-ounce, pound-for-pound, etc. As an example, bigger packages are not always cheaper than smaller ones.
• Use coupons carefully. Do not assume they are the best deal until you've compared them to the prices of competitive products.
• Make sure all documents you sign are in a language you understand.
• Don't rely on a salesperson's promises. Get everything in writing.

On Buying Cars

• Check out CarBuyingTips.com

• When buying a car, make sure it is tested by a mechanic you trust.

• Verify what you sign are identical -- ie. if there are carbon copies make sure they are the same as the original

• If you re buying through Ebay -- make sure you actually are buying through ebay -- NOT from a seller circumventing the system

• Don't allow yourself to be rushed.

• One of Motley Fool's books ( The Motley Fool: You Have More Than You...) suggested this: go to the car dealer with several friends. Test drive what you like. Leave. Research online to find dealer prices. Fax requests with your ideal car to a bunch of dealers. With the offers that look good go to the dealer with your group of friends. Don't be afraid to say no (your friends will back you up, that's why they're there.) When you do buy you'll be getting what you want at a good price from a dealer you like.

Getting the Money Back

Several people have asked "How can I get my money back"? If the offer you answered was ONLINE, you actually have a reasonable chance. Here are steps you can take.

1. Keep copies of ALL correspondence (This is true whether online or print). ALWAYS be polite, truthful and to the point.

2. First try the obvious: Contact them by email, physical mail, phone and fax. Include as many details as possible while being truthful and polite. Keep copies and dates.

3. Email to postmaster@website.com and webmaster@website.com. [Put the website you ordered from in the email address! NOT website.com.] You will want to email at least 3 times before doing the next steps. (If the company is a one person company, they MAY be just on a one week vacation. So wait one week before going to the next steps. If you are feeling generous - or it is around a holiday, wait 10-14 days (email-ing every few days).

4. If none of the above work, you may be able to get their attention by contacting their advertisers. This is how I have successfully obtained refunds. If they have partners listed on their website, email them. Email ad companies as well. In your email, politely include details of your situation in hopes that it will get the attention of the company. Be sure to tell the company *WHY* you are emailing them and how you are hoping to get your money back from the company. If the website is part of an affiliate program or group of stores, mail the provider such as: yahoo stores, linkshare, flycast, etc. Always be polite, to the point and truthful.

5. Another approach is to try to get upline ISPs to close them down. If you have email from the company, view the FULL headers. In order to receive the "full headers" from netscape messenger:
   click on "View -> Headers -> All " when in netscape mail.

   To get full headers from Outlook:

   click on "View->Current View->Customize Content
   Select Fields
   "Select Available Fields From:"
   Highlight All Mail Fields
   In top view -- Highlight all fields
   Add
   OK
   Now, contact postmaster of all addresses in the from path with an explanation of what happened. Often upline postmasters can close down a website if there is proof of illegal dealings. Make sure you send the full story.

6. The next step is to try the local contacts for the business: write the better business bureau, chamber of commerce, and other business organizations. If the item was mailed, you may also contact the post office. These are less likely to work, but may prevent someone else from doing the same thing.
7. Most websites are honest, but a few are not. Some are a little lax in the customer service department. trust your instincts. If you just don't like it, go elsewhere.

Learn to Say No

I learned long ago to never buy anything from cold callers. However, recently, I learned that one also needs to simply say "NO" early on so one doesn't waste time.

Saying "NO" simply allows you to get off the phone faster, not give others information you would rather the caller not have, AND lets you spend your time on more valuable things.

Some people say they like to waste a cold callers time. However, if you are wasting their time -- you are also wasting yours. Simply saying "No thank you" and hanging up saves lots of grief.

If you decide to listen to their call anyways, remember to remind yourself that if it sounds too good to be true, it probably is.

Good telemarketers are trained to deal with your objections, so if you really aren't interested, say so and hang up nicely. They're just people trying to earn a living.

Additionally, if you have to "BUY NOW", don't. There always is a second chance.

Always remember, it's your phone, they're using your time. It's Ok if you are interested in their product and it's ok if you aren't. Then you end the call.

Business Related

Here are some common scams that affect businesses:

• False Invoice - Are you getting invoices for products you haven't paid for? A common scam involves sending companies an invoice that is false in hopes it will be paid.

• Padded Invoices - Often invoices can be padded with extra fees. Make sure everything is a valid charge on your bill.

• Misrepresentation - Telemarketers will often try to make you think you are buying from a different firm, buying a different product, or getting extras which seem worth more than they are. Buyer beware.

• Sending Unwanted Merchandise - Toner and ink cartridge companies are well known for sending unwanted merchandise along with large bills. One needs to NOT accept the package in the first place as returning it can be costly.

• Getting Information from Naive Employees - The easiest way to break security of a company is to charm an employee of that company to give you the information you need. Hence, train your employees to only give information you are willing to have shared.
• The UpSell. You see something you really like, so you go online, or call, to order the item. The person you call or the website makes a suggestion to be other products related to the one you're interested in. The TV ads do this well as do some websites, Amazon does it very well. It's not bad, but be aware of it before you call or go online.

Resources

Craft Scam Prevention - Craft scams to avoid, how to make money doing crafts from home, and related books.

Business Fraud Prevention - Tips for businesses to protect themselves against Internet fraud.

Scambusters.org - More scams to avoid.

Urban Legends - Urban legends going around (ie: win disney trip by sending email).

CBS Marketwatch article on home businesses.