There are MANY, Report Scam out there – which is why it is so important to be able to recognize them when you see them. Avoiding scams is tough but we are here to help!! If you are unsure then you need to ask yourself the following questions: What is the value that you have added to the product or project?
If you are not adding value to the product or project – then why would anyone pay you for your work.
The exception to this rule would be the instances where you are making money off of peoples differing perception of value. The risk you take is that you are involved in a company that is scamming you or teaching you to scam others or both. You also need to ask yourself: even if this is legal – is it ethical?Would someone pay you to perform this service in person?
If you can’t get paid for it in person, then why would anyone pay for it online? Again it is possible that the business is perfectly legal and yet pays you for things online that a person in real life would not pay you for – but the odds of this being the case are extremely small. It is more likely that the business is designed to scam you or to train you to scam others or both. I have a low risk tolerance and if either: (1) I am not adding value or (2) no one would pay me for this in “real life” then I would walk away – maybe even run!!
Some legitimate businesses may require that you pay a franchise fee or buy a business kit in order to start your business with them. The presence of an upfront fee is not a definite sign of a scam – many businesses have legitimate reasons for requesting upfront fees. Reputable franchises spend a lot of money on advertising, research, branding and other items.
They charge a franchise fee in order to cover these costs and in order to earn a profit from the companies operating under their banner. Chances are decent that if you have heard of and seen the franchise in your real life (other than from the person “selling” it to you!!) then it is legitimate business. Kit based businesses can collect fees for the same reasons and also to cover the cost of your business start-up kit.
Again this is a mixed bag – some companies charge fees that merely recover their costs of material – knowing that they will make their money off the mark-up on their products. Other (less reputable) companies often sell “kits” that are made up of books and other materials that provide little or no value to the person purchasing it – they do not care if you sell any of their products – some do not even have real products – they make their money from selling these “kits”. Again it is important to go for businesses that you are familiar with or do your research.
4. Do you KNOW anyone that has successfully made money with this business?
The main reason I wanted to start this website and develop a ‘owners talk’ section is so that people who have a legitimate tried and tested business can help others to start their own. There is no testament stronger than the endorsement of someone that you know and trust!!
Does the person “recruiting” you make money just by signing you up? Beware of “pyramid” schemes – schemes in which people are paid based on how many people they sign up not based on sales or other indicators. Finders fee or referral fees are very common in all businesses but they are not the main source of money in a legitimate business.
Not only are pyramid schemes illegal in most places but only the first few people in a pyramid actually make any money – the people in the centre are lucky to recover their initial investment and the people at the bottom are the ultimate losers – they lose their full investment.