WORK-AT-HOME SCHEMES

The following is summarized from the websites of the Better Business Bureau (BBB): http://ct.bbb.org/article/new-work-at-home-regulations-offer-consumers-more-protection-33247 and the Federal Trade Commission (FTC): http://www.ftc.gov/bcp/edu/pubs/consumer/invest/inv14.shtm

Advertisements posted on telephone poles, placed in newspapers, or sent by e-mail to personal computers promise opportunities to earn extra income by working at home. However, the ads often fail to disclose what kind of business it is, what type of work is involved and how much money it may cost you to get the information and/or materials and supplies needed to begin work.

TYPES OF WORK AT HOME SCHEMES

There are many different kinds of work-at-home schemes promising “easy money” that may end up having you waste your time, lose personal funds and expose you to liability for perpetuating fraud. Common types of work-at-home schemes are as follows:

• Assembly or Craft Work –  May require investing hundreds of dollars for materials and instructions to produce items such as baby shoes, plastic signs and toy clowns. After spending hours of your time in making the products, the company that has promised to buy them backs out, claiming the products don’t meet their “quality standards”.
• Chain Letters – Ask you to send money for mailing lists and labels in exchange for “receiving thousands of dollars in return”. The only people who benefit from these schemes are the anonymous people at the top of the chain who continually change names, addresses, and post office boxes.
• Envelope Stuffing – Involves paying cash for details on money-making ideas. The “idea” turns out to be instructions on how to place the same kind of envelope stuffing ad which can involve spending several hundred dollars on advertising, envelopes, postage, and printing costs. The only way to make money is if people respond to your ad.
• Multi-Level Marketing – Pyramid-type schemes which resemble multi-level marketing where people have sold products of reputable companies directly to their neighbors and co-workers. The focus of illegitimate schemes is to recruit people into their programs and have them invest in product samples. Very few products are sold and the people at the bottom who cannot make money by sales or recruitment in a glutted market end up losing their investments.
• Online Businesses – People responding to ads to start an online business end up paying for guides to work-at-home jobs such as data entry or word processing or schemes such as assembly crafts and envelope-stuffing. The guides and accompanying computer disks may list free government websites or business opportunities requiring investment of more money.
• Processing Medical Insurance Claims – Ads will claim that you can earn hundreds of dollars per week by processing medical insurance claims for health care professionals. Promoters will urge you to buy software programs and attend training sessions for thousands of dollars. The market for this type of service is small or nonexistent and you will be competing for clients with well-established companies.

WHAT A WORK-AT-HOME BUSINESS MUST DISCLOSE

NOTE: As of March 2012, new amendments to the Federal Trade Commission's Business Opportunity Rule (http://www.ftc.gov/opa/2011/11/busopp.shtm) went into effect to protect consumers from these schemes.  The changes list new disclosures work-at-home businesses must provide to consumers who are considering participation in their programs.  There are five pieces of information that must be provided by the business using the FTC approved disclosure form:

• Its identifying information (i.e. the name, business address, and telephone number)
• If earning claims are made, the basis for that claim
• Whether the company, its affiliates or key personnel have been involved in certain legal actions
• Whether the company has a cancellation or refund policy
• A list of people who bought this business opportunity within the previous three years

WHERE TO COMPLAIN ABOUT WORK-AT-HOME SCHEMES

If you think that a work-at-home program is not legitimate, contact the company and ask for a refund. If the dispute is not resolved, Connecticut residents can contact: the State of Connecticut Attorney General’s Office: www.ct.gov/ag/, the Better Business Bureau: http://ct.bbb.org/, the State of Connecticut Department of Consumer Protection: www.ct.gov/dcp/, or their local town Postmaster: http://usps.whitepages.com/post_office.
Complaints can also be registered online at the websites of:
Better Business Bureau of Connecticut (for companies located in Connecticut): https://odr.bbb.org/odrweb/public/getstarted.aspx
The Connecticut Department of Consumer Protection: http://www.ct.gov/dcp/lib/dcp/pdf/forms/consumer_statementcpfr-2_rev_8-06_edited1106.pdf,
the Federal Trade Commission: https://www.ftccomplaintassistant.gov/
the U.S. Postal Inspection Service (for mail fraud): http://about.usps.com/publications/pub300a.pdf

TO FIND PROVIDERS IN CONNECTICUT'S COMMUNITY RESOURCES DATABASE:
Search by service name: General Consumer Complaints

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SOURCES: Better Business Bureau website; Federal Trade Commission website
PREPARED BY: 211/pt
CONTENT LAST REVIEWED: August2012