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12 Scams Most Likely to be Found On The Internet and often confused with Genuine Network Marketing
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Consumer Alert
To allow you to easily identify pyramid scams and other illegal schemes and practices which may be confused with genuine Network Marketing, we have identified the 12 most likely questionable deals you will come across on the Internet.
We advise everyone to do their due diligence thoroughly on the business opportunity they are considering. Unless the Network Marketing opportunity is backed by a rock solid established company of at least 3 years trading in the country you live in, they have physical or recognized products/services in regular monthly demand, an organised approach to marketing and training of the Marketing Network... then you will probably be wasting your money and time.
The easiest way to assess any business opportunity is to apply for the company generated literature to be sent by email directly to you from your contact or perhaps by postal mail from within the country you live in. The only guaranteed way of receiving an honest and credible presentation is to get to know your sponsor at least on the phone first before making a decision. Emailed literature and personal websites can be done by any 14 year old so make sure what you receive is the genuine article! Would you trust a complete stranger to tell you the truth when they are trying to make money from you? If at all unsure ask to speak to the person on the phone and/or contact the company direct or ask to speak to an upline person.
By law in most countries, the Network Marketing Company must tell you the truth!
See how many of the scams below you can identify!
1. Business opportunities scams
These business opportunities, most of them originating in the States but also quite a few in the UK and elsewhere, often parading as Network Marketing operations, make it sound easy to start a business that will bring lots of income without much work or cash outlay. The solicitations trumpet unbelievable earnings claims of $140 a day, or over $1,000 a day, or more, and claim that the business doesn't involve selling, any meetings, or personal contact with others, or that someone else will do all the work for you. Many business opportunity solicitations claim to offer a way to make money in an Internet-related business. Short on details but long on promises, these messages usually offer a telephone number to call for more information. In many cases, you'll be told to leave your name and telephone number so that a salesperson can call you back with the sales pitch.
The scam: Many of these are illegal pyramid schemes and Ponzi scams, often masquerading as legitimate Network Marketing opportunities and are set up to fleece people of their money. Make sure the business you are looking at is based in your country with real products and at least a 3 year trading record. Any decent Network Marketing Company will be only too pleased to supply a proper information pack about the company and the owners. These days information packs in PDF format can be easily emailed to you if you want professional information about the opportunity
2. Bulk email scams
Bulk email solicitations offer to sell you lists of email addresses, by the millions, to which you can send your own bulk solicitations. Some offer software that automates the sending of email messages to thousands or millions of recipients. Others offer the service of sending bulk email solicitations on your behalf. Some of these offers say, or imply, that you can make a lot of money using this marketing method.
The problem: Sending bulk email violates the terms of service of most Internet service providers. If you use one of the automated email programs, your ISP may shut you down and in addition impose fines on you that could amount to thousands of dollars. Worse, by inserting a false return address into your solicitations, as some of the automated programs allow you to do, may well land you in legal hot water with the owner of the address's domain name. Most US states and countries like Australia have severe penalties in place and do not hesitate to implement strong laws regulating the sending of unsolicited commercial email. So don't be sucked into unwittingly violating country or state laws by sending bulk email. Few legitimate businesses, if any, engage in bulk email marketing for fear of offending potential customers and driving them away. Bulk email is one of the most offensive scams operating on the Internet.
The only way you can safely bulk email people are the ones who have opted into your own newsletter or data base for information they have requested from you.
3. Chain letter scams
You're asked to send a small amount of money ($5 to $20) to each of four or five names on a list, replace one of the names on the list with your own, and then forward the revised message via bulk email. The letter may claim that the scheme is legal, that it's been reviewed or approved by the government; or it may refer to sections of U.S. law that legitimize the scheme. Don't believe it.
The scam: Chain letters, traditional or high-tech, are almost always illegal! Nearly all of the people who participate in them lose their money. The fact that a "product" such as a report on how to make money fast, a mailing list, or a recipe may be changing hands in the transaction does not change the legality of these dubious schemes.
4. Work-at-home Ponzi schemes
Envelope-stuffing solicitations promise steady income for minimal labour-for example, you'll earn £1 each time you fold a brochure and seal it in an envelope. Craft assembly work schemes often require an investment of hundreds of dollars in equipment or supplies, and many hours of your time producing goods for a company that has promised to buy them.
The scam: You'll pay a small fee to get started in the envelope-stuffing business. Then, you'll learn that the email sender never had real employment to offer. Instead, you'll get instructions on how to send the same envelope-stuffing ad in your own bulk emailing. If you earn any money, it will be from others who fall for the scheme you're perpetuating. And after spending the money and putting in the time on the craft assembly work, you are likely to find promoters who refuse to pay you, claiming that your work isn't up to their "quality standards."
5. Health and Diet scams
Pills that let you lose weight without exercising or changing your diet, herbal formulas that liquefy your fat cells so that they are absorbed by your body, and cures for impotence and hair loss are among the scams flooding email boxes. Another recent one has been mass mailings to all and sundry encouraging men who may think they are somewhat under endowed by nature to buy special pills that will give 25% increase in 20 to 30 days so they are better able to satisfy their lover. Literally tens of thousands of men with inferiority complexes have been sucked into this one!
The scam: These pills and gimmicks don't work in the majority of cases. The fact is that successful weight loss requires a reduction in carbohydrates and calorie intake and an increase in physical activity. Beware of case histories from "cured" consumers claiming amazing results; testimonials from "famous" medical experts you've never heard of; claims that the product is available from only one source or for a limited time; and ads that use phrases like "scientific breakthrough," "miraculous cure," "exclusive product," "secret formula," and "ancient ingredient."
6. Effortless income
The trendiest get-rich-quick schemes offer unlimited profits exchanging money on world currency markets; newsletters describing a variety of easy-money opportunities; the perfect sales letter; and the secret to making $4,000 in one day.
The scam: If these systems worked, wouldn't everyone be using them? The thought of easy money may be appealing, but success generally requires hard work.
7. Free goods scam
Some email messages offer valuable goods-for example, computers, other electronic items, and long-distance phone cards-for free. You're asked to pay a fee to join a club, then told that to earn the offered goods, you have to bring in a certain number of participants. You're paying for the right to earn income by recruiting other participants, but your payoff is in goods, not money.
The scam: Most of these messages are covering up pyramid schemes, operations that inevitably collapse. Almost all of the payoff goes to the promoters and little or none to consumers who pay to participate.
8. Investment opportunities scam
Investment schemes promise outrageously high rates of return with no risk. One version seeks investors to help form an offshore bank. Others are vague about the nature of the investment, stressing the rates of return. Many are Ponzi schemes, in which early investors are paid off with money contributed by later investors. This makes the early investors believe that the system actually works, and encourages them to invest even more. A good example of this was a website pyramid selling "Sky..." scheme whereby hundreds of thousands of people paid into it yet only the people who started the scheme actually made any money from it. It was eventually closed down by the US Government after the operators pocketed tens of millions of dollars.
Promoters of fraudulent investments often operate a particular scam for a short time, quickly spend the money they take in, then close down before they can be detected. Often, they reopen under another name, selling another investment scam. In their sales pitch, they'll say that they have high-level financial connections; that they're privy to inside information; that they'll guarantee the investment; or that they'll buy back the investment after a certain time. To close the deal, they often serve up phoney statistics, misrepresent the significance of a current event, or stress the unique quality of their offering-anything to deter you from verifying their story.
The scam: Ponzi schemes eventually collapse because there isn't enough money coming in to continue stimulating earnings. Other similar schemes are a good investment for the promoters, but not for participants.
9. Cable descrambler kit scams
For a small sum of money, you can buy a kit to assemble a cable descrambler that supposedly allows you to receive cable television transmissions without paying any subscription fee.
The scam: The device that you build probably won't work. Most of the cable TV systems in the U.S. use technology that these devices can't crack. What's more, even if it worked, stealing service from a cable television company is illegal.
10. Guaranteed loans or credit, on easy terms scam
Some email messages offer home-equity loans that don't require equity in your home, as well as solicitations for guaranteed, unsecured credit cards, regardless of your credit history. Usually, these are said to be offered by offshore banks. Sometimes they are combined with pyramid schemes, which offer you an opportunity to make money by attracting new participants to the scheme.
The scams: The home equity loans turn out to be useless lists of lenders who will turn you down if you don't meet their qualifications. The promised credit cards never come through, and the pyramid money-making schemes always collapse.
11. Credit repair scam
Credit repair scams offer to erase accurate negative information from your credit file so you can qualify for a credit card, auto loan, home mortgage, or a job.
The scam: The scam artists who promote these services can't deliver. Only time, a deliberate effort, and a personal debt repayment plan will improve your credit. The companies that advertise credit repair services appeal to consumers with poor credit histories. Not only can't they provide you with a clean credit record, but they also may be encouraging you to violate federal law. If you follow their advice by lying on a loan or credit application, misrepresenting your Social Security number, or getting an Employer Identification Number from the Internal Revenue Service under false pretences, you will be committing fraud.
12. Holiday prize promotion scams
Electronic certificates congratulating you on "winning" a fabulous holiday for a very attractive price are among the scams arriving in your email. Some say you have been "specially selected" for this opportunity.
The scam: Most unsolicited commercial email goes to thousands or millions of recipients at a time. Often, the cruise ship you're booked on may look more like a tug boat. The hotel accommodations likely are shabby, and you may be required to pay more for an upgrade. Scheduling the vacation at the time you want it also may require an additional fee.
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