Almost three out of every four people in multi-level marketing jobs make no money or actually lose money. Of course, most people would never knowingly take on a job with such a high risk of not getting paid. But when that job promises to let you work from home, it can suddenly seem worth a try.
Thanks to the internet, work-from-home scams have increased in recent years. And they look far different than they used to. The days of pyramid and Ponzi schemes are mostly over: now, you’re more likely to get recruited for multi-level marketing or fake virtual assistant jobs.
How can you tell a scam from a real work-from-home business opportunity? And what about those gray areas that aren’t quite scams, but aren’t quite profitable either? We’ve got the answers—read this before you commit to something you might regret.
Pyramid and Multi-Level Marketing Schemes: What’s the Difference?
Most people have heard of pyramid schemes. These now-illegal scams promise to pay members for merely recruiting more people, instead of selling products or services. As more people join, recruiting becomes impossible, so new members can’t profit.
Since they’re widely mistrusted and mostly illegal, you don’t run across many pyramid schemes these days. But in some ways, the multi-level marketing (MLM) model has taken their place.
MLMs are one of the most common misleading work-from-home “jobs” available today. But as anyone trying to recruit you for an MLM will tell you, “It’s not a pyramid scheme!” And they’re right—it’s not.
MLMs hinge on selling products or services, while also trying to recruit new members to work below you. The model marries the pyramid idea with actual products to sell. You may also see MLMs referred to as networking marketing opportunities.
And to be clear: it is possible to make money through an MLM. It’s just that only a small fraction of people who join make money, while the vast majority makes nothing or loses money. So even though an MLM may not be a scam in the same way a pyramid scheme is, we recommend avoiding these high-risk “opportunities.”
Why do so many people lose money with MLMs? It has to do with the way these companies are structured. People who join have to buy their own inventory to sell, and they often get pressured to buy larger stocks than they need. Then, they make money through commissions from their sales. They can also profit by recruiting new people and getting a commission from each of these members of their “downline.”
This means that for new members, part of the profit from each sale is going into the pockets of the people in their “upline.” And, while they’re pressured to buy inventory, there’s often little guidance on how to sell that inventory effectively. Many people join MLMs, sink funds into their inventory, and then leave when they realize they can’t sell it fast enough to make a profit.
However, because MLMs usually involve a friendly-sounding community, promises of big bucks, and lots of pressure to stick with it, people often invest hundreds or thousands of dollars before they leave. While it is possible to make a profit with an MLM, the numbers are not on your side. Better to steer clear and look for a job that will reliably pay you for your time spent.
Other Common Work-from-Home Scams
While MLMs are one of the most pervasive scammy work-from-home options, you may well run into others on the job search. Here are a few of the most common scams to watch out for.
Virtual Assistant Scams
In this kind of scam, someone posts a great-sounding job opportunity for a virtual assistant. It sounds simple: get paid well to respond to emails, field phone calls, and other generic tasks. But then, they offer to send you a large up-front payment—they just need a few of your financial details first.
These scams aim to access your bank account information and steal your funds before you know what’s happening. Be wary of any “virtual assistant” job posting: it’s actually pretty rare as a legitimate job. If they offer to pay you before you’ve done any real work, run—and block them from contacting you again. Otherwise, they’ll spam your inbox with fake threats to contact the authorities if you don’t follow through.
Social Media Scams
Many modern scams also prey on people’s love of social media. In these scams, you’re promised hundreds of dollars just for spending time on your favorite social platforms.
However, before you can get paid, the company usually asks you to pay to access training or their platform. Here’s a tip: any job that wants you to pay to work isn’t legitimate. A real job will pay you without asking you for money first.
Data Entry Scams
In these jobs, the promise is that you’ll get paid well for simple data entry done from home. While data entry is also a real job, the scams abound. Real data entry jobs don’t usually get paid that well—so if it promises enormous profits, don’t trust it.
These scams often take your money by requiring you to buy their expensive software before you can start. Again, you shouldn’t have to pay to start a job—a real employer will provide you with the software you need to work with them.
How to Avoid Getting Duped
While these types of scams have become incredibly common, there are countless other work-from-home scams to avoid. Even if you think you know them all, new ones pop up all the time. So instead of trying to memorize every type of scam out there, use these tips to boost your work-from-home scam radar.
Keep Your Head Clear
When you’re dying to leave your drab office and end your miserable commute, it’s easy to let emotions cloud your mind. Your excitement about a promising work-from-home offer can blur your judgment, leading you to sign up for a scam.
Try to keep a level head during your job search. If you find a job that sounds too good to be true, give yourself a day to think about it before you apply. When you come back to it with a calmer perspective, the red flags might be more apparent.
Avoid Up-Front Transactions
Normal jobs won’t ask you for money upfront, and they won’t pay you upfront, either. Be wary of any offer that promises to pay you before you’ve done any work, or asks you to pay for equipment or software before you’ve earned your first paycheck.
Those up-front transactions are putting your financial information in the hands of an entity you know nothing about. Even if the initial transaction is just a small fee, these scammers can add on new, unexpected future charges, or even outright steal your information.
If the job promises that you’ll make great money without investing any effort, it should sound too good to be true—because it is.
All legitimate remote jobs require actual work. Just because you’re working from home doesn’t mean you’re getting paid to do nothing. If a job promises easy money to people with no marketable skills, it’s not a real job.
Wait for an Interview
A legitimate, full-time remote position will almost always involve an interview via phone or video call. If you don’t have an interview, how can the company know they want to hire you?
That said, many freelance or contract work-from-home positions don’t involve interviews. However, at the least, they will ask you to send your resume and examples of your capabilities before hiring you. If you don’t have any interaction where you show an employer what you’ve got, it’s likely a scam.
Avoid Employers That Contact You First
If it’s a legitimate company, lots of people should want to work for them. So why are they showing up with an unsolicited email in your inbox?
Real work-from-home jobs aren’t desperate for people to hire. They’ll wait for potential employees to contact them with applications. But scammers always need new victims, so they reach out to people first.
Find out How You’ll Get Paid
If a job promises big paychecks but isn’t clear on when or how you’ll get them, that’s another red flag.
Real job opportunities make their payment structures clear. Maybe you’ll get paid every other week via PayPal, or once a month via direct deposit. They won’t leave you questioning when or how you’ll get paid.
Also, avoid any “employer” that promises to send you a big check, and then asks you to take a portion of it for your payment. Real work-from-home jobs don’t expect you to handle large amounts of money that’s not yours.
Do Your Research
Always look up a company online before you start working with them. Dig around, and go beyond the first page of Google results. Check out their social media pages, and check Glassdoor for what former employees have to say. If there’s no information about a company beyond its website, it’s probably not legit.
What to Do If You Find a Scam
If you notice a work-from-home scam, you can help alert others by reporting it on the Better Business Bureau’s Scam Tracker. This is also an excellent place to research anything you suspect is a scam.
However, keep in mind that scammers are always coming up with new ways to cheat people out of their time and money. They can pose as known, legitimate businesses, complete with familiar-looking logos. They can offer realistic-sounding opportunities. The best way to stay safe is always to approach remote job opportunities with caution, and do careful research before moving forward. There are many legitimate remote jobs out there—just don’t get duped while seeking out the perfect one.
Of course, work-from-home scams aren’t the only scams you’ll need to avoid. Next, check out our guide to avoiding common travel scams.