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Beware Big Promises by Online 'Work-at-Home' Schemes

Sidebar: Look Before You Leap Into an Online Business Venture ...view

While surfing the Web last month, Gilbert Hernandez of Mission Viejo, Calif., came across realcashprograms.com – a site promising a smorgasbord of moneymaking opportunities.

"Earn $1,000s Monthly! Be your OWN boss!" read a headline. The eight "top" programs advertised seemed lucrative indeed. For $79, the site said, Hernandez could fill out online marketing surveys for $75 a pop. He could make $800,000 in government grants, $3,200 a month driving ad-bearing cars, and $4,000 a day to watch TV, the site promised.

Or, for a $99.95 "group buy," he could have all eight programs plus two "bonus programs"– one to buy homes with no money down and the other to start an online auction business. Though tempted, Hernandez wondered if all this could really be true.

So Consumer Reports WebWatch took the plunge for him. As with many similar claims on televised infomercials, it soon became clear that the only certain cash was the up-front fee.

We noticed a red flag immediately: While realcashprograms.com asks for credit-card numbers, the site provides no phone number, physical address or other company information. The actual transaction was handled through Click Bank (www.clickbank.com), a Boise, Idaho-based e-commerce company that has a satisfactory rating with the Better Business Bureau. But a Click Bank spokesman would not provide Consumer Reports WebWatch with corporate information on realcashprograms.com. Whois.org – a tool few Web users know to use for site background information – listed only a post-office box for "Money Making Secret" in Swanton, Vt., and an 800 number and Hotmail address that did not respond to inquiries about realcashprograms.com.

But we did get something for our money. A minute after we completed the transaction (our credit card was promptly billed $99.95), we received an e-mail from realcashprograms.com with passwords to Web sites for the eight promised programs.

Working Hard for the Money

Now we were ready to start making our investment back. We tested the four programs that seemed to offer us the most money for the time invested. Here’s what we found:

Promise: Get paid $75 per online survey ("guaranteed pay for each survey you fill out").

Reality: Receive a list of 362 public Web sites realcashprograms.com describes as willing to compensate users for taking online surveys – in many cases, in non-monetary rewards such as discount coupons or prizes. Dozens of these sites, such as a music site called garageband.com, simply offer users a chance to sign up for a contest. Others, such as focusline.com, say they will pay $25-$45 per survey within 8 weeks but had no company address.

Users have to register (sometimes with personal information such as Social Security and phone numbers) and then wait for survey invitations. Privacy policies existed on nearly all sites, but in almost every case they were brief and unclear about exactly what might happen to our personal information.

Twenty-two days after signing up for 15 survey sites, we were still awaiting a single survey invitation.

Promise: Get paid $95 an hour to shop. ("Mystery Shoppers needed!")

Reality: Realcashprograms.com provides a list of about 140 sites where visitors complete online applications to be a "mystery shopper" on call to buy items at bricks-and-mortar stores and file a report within 24-48 hours on retailers’ service.

These "shopper" sites say they will pay shoppers a $25 stipend and reimburse them for purchased items, all within several weeks. Job availability may make it difficult for career shoppers to pay the rent, however. In the entire state of California, for example, one listed agency, questforbest.com, had only two openings – for "restaurant shoppers" in the small suburban towns of Elk Grove and Goleta.

Promise: Get paid $3,200 a month to drive a new car bearing an advertisement.

Reality: The site provides a list of businesses promising to pay up to $150-$400 a month to car owners willing to drive daily with “auto wraps,” advertisements printed on vinyl, glued snugly to their chassis. One of these sites, autowraps.com, says drivers could receive $100-$3,200 a month. But the site explains applicants’ names merely go on a list of people who might be called, and invitations at the high end of this scale are rare: "Each year our program continues to grow and your chances continue to increase. The odds of being selected are definitely better than winning the lottery!!"

Promise: Earn up to $4,000 a day watching TV shows.

Reality: While the other realcashprograms.com offerings were largely repackaged information, the authors are more inventive here. Rather than merely sit back and channel-surf for cash, we are advised to consider a number of entrepreneurial challenges to make the $4,000 windfall – but are not provided assistance in pursuing these ventures.

Realcashprograms.com suggests we start by watching home-shopping channels: "You can buy the merchandise and resell it at a profit." We might also become a "television ad representative," it says, and "swing some of the infomercial advertisers to your own media outlets." Or, the site suggests we call TV-watching friends and "start a local ratings service" to compete with ratings behemoth Nielsen.

When Is Marketing on the Level?

"Work-at-home" packages like realcashprograms.com’s have understandably frustrated buyers who expect to make easy money. In 2003, the U.S. Federal Trade Commission (http://www.consumer.gov/sentinel/trends) received more than 3,300 complaints alleging fraud by purveyors of Internet-based work-at-home and similar business opportunities, about 250 more than in 2002. Similarly, the nonprofit National Fraud Information Center (fraud.org) received a small but vocal number of complaints about online "kits sold on false promises of big profits from working at home"– about 750 calls, double the number for 2002.

Dr. Stephen Barrett, a consumer advocate who has written widely on Internet fraud, says most of these programs are legal because they avoid making technically false statements even as they promise rosy scenarios. Consumers should be skeptical of "companies that focus on selling you an opportunity instead of a product," he says. "There is no work-at-home scheme where you pay that is not misleading."

Realcashprograms.com does say, in prominent type, it will refund our money if we earn nothing in 90 days. So, with no income after 10 days of using the site, we inquired via the only contact given (FastMoneyCash@aol.com) about what it would take to actually get our $99.95 back.

Within a few days, we received an automated response from "Jerry," a customer service representative. Even though we had not indicated the date we purchased the realcashprograms.com package, he said we would have to wait until the full 90 days had passed and then inquire again.

But we weren't left entirely empty-handed. "To make you even more satisfied," Jerry added, "we will give you 8 more FREE Programs!" And indeed, we received eight more links and passwords (including "Get Paid To Answer Your Phone," "House Sitting Jobs," and "FREE Healthcare") to try on a new frontier, dreamjobsathome.com.

Sidebar: Look Before You Leap Into an Online Business Venture

The U.S. Federal Trade Commission offers the following tips for consumers considering an Internet-related business opportunity:

1. Consider the offer carefully. If it claims buyers can earn a certain income, then it also must give the number and percentage of previous purchasers who achieved those earnings. If the seller makes an earnings claim but doesn’t back it up with statistics, the seller is probably violating the law.
   
2. Get earnings claims in writing. Business opportunities costing more than $500 must back up earnings claims in writing. This document should include the earnings claim and the number and percentage of recent clients who earned at least as much as suggested. For those opportunities costing less than $500, consumers should request the claims in writing.
   
3. Review the franchise disclosure document. Under the FTC Franchise Rule, many business opportunity promoters must give potential buyers a franchise disclosure document, which features information about the company – including whether it has been the subject of lawsuits or fraud allegations. In particular, look for a statement about previous purchasers. Be wary if the seller offers a list of references instead of purchasers, as they are probably fake.
   
4. Talk with previous business opportunity buyers. Most business opportunity promoters must give you the names, addresses and phone numbers of at least 10 previous purchasers who live nearest to you, according to the FTC. Interview them in person or where they work to minimize risks of being misled by phony references.
   
5. Check for past complaints. Contact the attorney general's office, state or county consumer protection agency and Better Business Bureau where the business opportunity promoter is based and where you live to find out whether there are any unresolved complaints. (Note, however, that a lack of complaints doesn't necessarily mean a lack of problems with that particular promoter or business opportunity. Unscrupulous dealers often change names and locations to hide a history of complaints.)
   
6. Consult an adviser first. See an attorney, accountant or other business advisor before you pay any money or sign any papers. If the promoter requires a deposit, ask your attorney to establish an escrow account where the money can sit safely until you close the deal.

Report fraudulent business activities to the state attorney general’s office in the state in which you live (a list can be found here: http://www.naag.org/ag/full_ag_table.php) or file an online complaint with the FTC (www.ftc.gov).

Robertson Barrett, a media consultant and writer, was a founder and managing editor of TIME.com and ABCNEWS.com. He was also vice president and general manager of The FeedRoom, a nationwide broadband news network in partnership with NBC and Tribune, and of Channel One Interactive, the educational television network's new media division.

He writes a biweekly column on scams and schemes online ans has written about spyware and Internet "washers" for Consumer Reports WebWatch.