Don't get me wrong. A lot of the home based business opportunities you find on the Internet should be viewed with extreme caution because they try to make you believe that you will earn a six figure income with very little effort and no training, but I wouldn't classify them as scams.
A scam is a deliberate attempt to dupe, deceive, or trick you into believing something is real when the scammer knows that it is not.
One of the most famous scams is The Nigerian Advance Fee Scheme. It involves the receipt of an unsolicited letter purporting to come from someone who claims to work for the Nigerian Central Bank or from the Nigerian government. In the letter, a Nigerian claiming to be a senior civil servant will inform the recipient that he is seeking a reputable foreign company into whose account he can deposit funds ranging from $10-$60 million which the Nigerian government overpaid on some procurement contract.
The goal of the scam artist is to delude the victim into thinking that he or she has been singled out to participate in a very lucrative -- although questionable -- arrangement. The intended victim is reassured of the authenticity of the arrangement by forged or false documents bearing apparently official Nigerian government letterhead, seals, as well as false letters of credit, payment schedules and bank drafts. The scam artist may even establish the credibility of his contacts, and thereby his influence, by arranging a meeting between the victim and "government officials" in real or fake government offices.
Once the victim becomes confident of the potential success of the deal, something goes wrong. The victim is then pressured or threatened to provide one or more large sums of money to save the venture. For example, an official will demand an up-front bribe or an unforeseen tax or fee to the Nigerian government will have to be paid before the money can be transferred. Each fee paid is described as the very last fee required. The scheme may be stretched out over many months.
That is the sort of scheme I think of when someone says that something is a scam.
I have not found any home based business opportunities that are such blatant scams. The problem is that many home based business opportunities lead you to believe that what you are seeking can be achieved much quicker and more easily than is likely. They are not scams because what they say is possible, but it is highly unlikely.
Leo Saraceni, a home based business expert, notes that two types of people buy into the hype or the scam:
"1) the excited, impulsive, no-previous experience entrepreneur: he/she will buy into the hype, even after researching basic things like the Business Bureau, put their heart into the business for about a month, get overwhelmed by the fact that they're actually running a business that they know nothing about, and quit.
Those folks turn around and classify their experience as a scam - they populate scams[dot]com simply to try and "get back" at the company
"2) the opportunity seeker, looking for immediate gratification: those are the people that really get scammed because they believe some banker in Hong Kong is going to transfer a TRILLION dollars into their account if they just give them $100."
So, what should you conclude?
Most home based business pitches are full of hype, but that doesn't make them scams. You should take the hype with a grain of salt. Do what lawyers call "due diligence". Find out all you can about the company, its products, the company founders, its markets, and its compensation plan. Try to talk with its distributors to see what success they have had and how long it took them to achieve it.
If I can be of any help with your "due diligence", don't hesitate to email me.
Howard Berger is a Caltech PhD with a long and successful career as a business analyst and entrepreneur. He is an authority on network marketing systems for home based businesses. After an exhaustive search of home based business opportunities, he has chosen a business that combines the best of MLM and Direct Sales.
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