Sunday, April 03, 2011

How to Avoid Business Scams

My friend Sally retired from her job a couple of years ago. She has enough money to pay her bills each month, but has little left over for extras. She would like to find some sort of part-time work to supplement her retirement income. She was approached by a gentleman from her church offering to help set her up with an on-line store. He has his own store that generates a couple hundred dollars each month with almost no effort by him. She asked if I thought this would be a good idea. She did not know the name of the company she’d be working with, but did know they charged a nominal set-up fee. Here are the tips I gave her:

1. Just because you heard about this from someone who goes to your church doesn’t mean the business is legitimate. Either the gentleman who told you about it is being scammed himself or he may know it is a scam and plans on scamming you as well. Pat Kiley one of the master-minds behind the Ponzi scheme Jacquelyn Mitchard and hundreds of others fell for presented himself as a Christian. Also, it is a known fact many scammers type the words “God Bless” on the bottom of their phishing emails in an attempt to appear legitimate.

2. Do your homework. Find out the name of the company you will be working with. Type the name of this company into a web search engine with the word scam behind it. Type the name again with the word sucks behind it. How many web results come up? For example I typed in “Monavie scam” (which I wrote about here) 413,000 results came up. “Monavie sucks” brought 444,000 results. Read what these posters have to say. This will give you a good idea of the experiences others had working with this company.

3. Find out all the costs involved. I imagine the nominal fee presented to you is a teaser charge and more fees are to come. Also, think about how you are going to market this site. A new website doesn’t magically attract customers. You will be competing with both EBAY and Amazon. What will differentiate your site?

4. Remember my rule of thumb when you are presented with a business idea. If the idea is so good why are they pitching it to you? If the idea really generates hundreds of dollars each month the presenters would be off making gobs of money not selling their idea to you.

5. On a side note, any business venture that instructs you to cash a check and wire a portion of the money via western union is a scam. THIS CHECK IS A COUNTERFEIT AND WILL BOUNCE. The money from the fraudulent check will be removed from your account; you will be charged a penalty plus be out the money you wired.

Earlier this year, my company’s bank account and routing number were stolen. The scammers forged this information along with our company name onto fake checks as part of a mystery shopping scam. Shoppers signing up for this job received a check for $2,500.00. They were instructed to cash the check, use $50 of the money to make a purchase at any local Wal-Mart store and wire $2000 via Western Union. They would then answer a couple of questions about their experience and keep the remaining $200 for their trouble.

Luckily for my company, none of these fake checks cleared our account. We received a call from our bank when the first check was presented alerting us to the scam. Our bank put a stop on all checks being presented on this account. Approximately fifteen checks were presented and cashed. I received a handful of desperate callers who pleaded with me to cover the bounced check. They really needed the money. Sorry, but that's not how it works.  One even threatened a lawsuit against our company.

6. Finally, any business idea that sounds to good to be true probably is. Be careful Sally. You can not afford to be scammed.


  1. All good advice. And, one more thing. If it's to easy - doesn't require WORK,'s probably a scam. The sad hard truth is that work, by definition, if.... well, work.

  2. Sorry for all the typos (above) - need to cut my nails!! happy Sunday.