Scams to Avoid

The reliable maxim, "If it seems to good to be true, it is.", should be the first rule of business for independent contractors and budding entrepreneurs.  Too often, self-employed business people make emotional decisions and fall prey to the clever scam artists who take advantage of hard working individuals.  Though all business purchases and investments should be carefully researched, the following are some common scams and schemes to avoid.

• Seminars and Webinars that charge money for basic business information

• Pyramid Schemes

• Mystery Shopper Schemes

• Free Government Money Scams (companies that charge money to provide information about and help in acquiring government loans and grants)

• Work at Home Scams

Most of the 'helpful' information provided by these scams is either outdated, inaccurate or can be found at your local library at no cost.  It's always best to exercise common sense.   You are not going to make thousands of dollars per month stuffing envelopes at home.  The government is not in the business of handing out grant money to for profit small businesses.  The government grant process for nonprofits and research institutes is complicated, timely and very demanding.  Be wary of a company that insists you will make lots of money signing up friends and colleaugues to 'sell' a product rather than making money selling the product yourself. 

The Better Business Bureau listed the Top Ten Scams of 2011 as:

• Job Scam - The job candidate is interviewed for a job, usually over the phone and receives and offer of employment.  Before starting the job, the candidate must complete a 'credit report' or provide bank information for direct deposit of paychecks. The online forms collect personal information that is used for identity theft.  There is no real job.
• Sweepstakes and Lottery Scams - You're notified that you won money in a sweepstakes.  In order to claim your prize you must send in or make a smaller payment over the internet.  Your money and, often, your personl information is stolen.  There is no sweepstakes or prize.
• Social Media/Online Dating Scams - Viral videos are often sent from 'friends' on social media sites.  When you click on the link to see the video you may be prompted to 'upgrade your flash player'.  When you do so, the file you download contains a 'worm' that logs into you social media account and steals your personal data.  It also sends the message out to your list of friends.
  
• Home Improvement Scams - To avoid home improvement scams whether you find them online or through a sales representative knocking at your door, check the Better Business Bureau website for legitimate contractors at: www.bbb.org/search.
• Check Cashing Scam - Craig's List and Western Union have been used by scammers, especially for check cashing schemes.  You may attempt to sell something on Craig's list.  You are contacted by an interested buyer who sends you a very large check as payment.  The buyer asks you to deposit the check and send the difference back to him by Western Union.  The check takes a few days to clear.  After you have wired the money to the buyer, the check bounces and the buyer is untraceable.  
  
• Phishing Scam - Phishing is when you receive a call from a fake company or organization requesting personal information.  It can also be a bogus email that hunts for data by putting a virus on your computer.  Most often these phishing emails and telephone calls use the names of major corporations, banks or clearing houses to appear legitimate.  Never give your information over the phone to anyone.  A legitimate bank, clearing house, the IRS, etc. will contact you by mail and provide you with an accurate return address and phone number if they need information from you.
• Identity Theft Scam - A new scam is occuring in hotels. Guests receive a call in the middle of the night, supposedly from the front desk clerk of the hotel.  The clerk says the computer system has failed and the system needs your credit card number again.  The scammer is hoping to catch a sleepy guest with his guard down.  Never give your credit card number over the phone to anyone who says he/she works at the hotel.
• Financial Scam - Many websites appear on the internet stating they will help people with debt, mortgage relief and accessing government help for mortgages.  They often ask for an upfront fee to help you with your mortgage or debt problem.  You can just as easily find any information they provide yourself at no cost.  These scammers take your money and leave you in greater debt than you were before contacting them.
• Sales Scam - Penny auctions look like a terrific deal but are often scams.  You bid for items at a cost much lower than the retail price.  You must, however, pay a fee to place a bid.  If you are not the winner of the bid you lose your fee.  Often the last person to bid before time runs out is the winner, not the actual lowest bidder.  All penny auction sites are not scams.  However, many are being investigated as online gambling.
  
• BBB - Unfortunately, the Better Business Bureau reports that scammers have sent out thousands of emails to businesses that appear to come from the Better Business Bureau (BBB) itself.  These emails contain viruses that steal banking and personal information.  The BBB is working to shut down these websites.  If you receive an email like this don't open it.  Contact the Better Business Bureau by phone or through their own website to investigate the matter.

As an enterpreneur, it is your responsibility to fully research any investments (big or small) before wasting your hard earned money.  Again, if it sounds too good to be true.  It is!  Trust your instincts and avoid scams.