COMMON SCHEMES

Con artists know working at home sounds attractive. That's why they place such ads. Here are some of the more common fraudulent work-at-home opportunities:

• Envelope stuffing: In this scam, promoters offer a money-making opportunity stuffing envelopes at home — for a "small fee." But victims do not receive a job. Instead, the victim pays the promoter who then provides them with the details of the scheme. The details are simple: contact other potential victims with an offer to make money stuffing envelopes and then sell them the details of the scheme. Typically, there is nothing to stuff. The fraud depends on the continuous recruitment of people to offer the same plan. The reality of envelope stuffing is that the process has become a highly automated and mechanized operation. Businesses use sophisticated computer software and mail-processing equipment to generate addresses and insert letters into envelopes. This eliminates any profit potential for an individual doing this type of work at home. Postal Inspectors know of no work-at-home envelope stuffing promotion that ever produces income as alleged.
• Product assembly and craft work: These programs often require victims to buy supplies and instructions for assembling simple toys or other products in their home. Then, many hours are expended producing items such as baby booties, plastic signs, or toy clowns for a company that has promised to buy them. However, after the victim has purchased the supplies and equipment and has performed the work, the promoter often decides not to pay because the work does not meet certain "quality standards." Unfortunately, with these promoters, no work ever meets their "standards," and the victim is left with merchandise that is difficult or impossible to sell. With no market for the product, the victim wastes time and money.
• Reshipping: These scams involve the receiving and reshipping of merchandise often ordered online, to locations that are usually overseas. The work-at-home shipper is told substantial amounts of money can be earned by receiving these goods, repackaging them, and then mailing them to the foreign addresses. However, the shipper is unaware the merchandise has been paid for with stolen or fraudulent credit cards. In effect, the shipper/victim becomes part of a fencing operation by receiving stolen goods and then mailing the goods to the promoter. The promoters, often based in a foreign country, are outside the reach of U.S. law enforcement and are able to cover their tracks to evade capture. The victim, however, is easily tracked and implicated in the crime.
• Multi-level Marketing: Multi-level marketing, a direct sales system, is a well-established, legitimate form of business often promoted as a work-at-home opportunity. Many people have successfully sold the products of reputable companies to their neighbors and co-workers. These people are independent distributors who sell popular products and also recruit other distributors to join them. On the other hand, illegitimate pyramid schemes can resemble these legitimate direct sales systems. An obvious difference is that the emphasis is on recruiting others to join the program, not on selling the product. For a time, new recruits who make the investment to buy product samples keep money coming into the system, but very few products are sold. Sooner or later, the people on the bottom of the pyramid scheme are stuck with a saturated market, and they cannot make money by selling products or recruiting. When the whole system collapses, only a few people at the top have made money — and those at the bottom have lost their investment.
• IP Relay Assisted Scheme: Online "fraudsters" have added another weapon to their arsenal. At first, when the "Reshipper Scam" began, unsuspecting e-commerce businesses were receiving fraudulent orders via email. As e-commerce began to recognize the "fraudster's" online signature, the respective e-businesses implemented changes to thwart the online criminal element. The "fraudsters" have responded in-kind by taking advantage of the Telecommunications Relay Services (TRS), for communication to place orders with merchants and to befriend Internet acquaintances. Under Title IV of the Americans with Disabilities Act (ADA), all telephone companies must provide free relay services. At first, the TRS was utilized by the traditional text telephones. However, with the advent of the personal computer and the Internet, TRS users are now able to utilize the Internet to complete an Internet Protocol (IP) Relay. By using the IP-Relay, anyone throughout the world who has a computer and Internet access can connect to a relay operator/communication assistant, and place a free telephone call, to include the international market.

This fraudulent work-at-home scam presents other drawbacks. Individuals attracted to work-at-home employment through advertisements posted on popular Internet job websites often are required to provide personal information. This means the prospective "employee" might be asked to submit Social Security Number, date of birth, and sensitive bank account information. Once "employees" are hired, they immediately begin receiving packages for reshipping at their residence. Unfortunately, the promoter now has personal information about the new "employee" which often is later used in identity fraud.

Another drawback is the "pay." Payment to employees usually arrives in the form of a third-party cashier's check, rather than a regular paycheck. The check often is larger than the payment due to the victims for their reshipping services. The employee is instructed to cash the check and electronically forward the excess amount to an overseas bank account. Ultimately, the bank will discover the cashier's check is bogus, and the victim will be liable for repaying the full amount of the check. At this point, "employees" realize they have not only fallen victim to a scam, but that the operators of the scam now possess their personal information.

Don't believe that you can make big profits easily. Operating a home-based business is just like any other business — it requires hard work, skill, good products or services, and time to make a profit. There is no easy way to wealth. A consumer's good judgment is the first, last, and best line of defense against the con artist.