According to the Federal Trade Commission, more than $328 million was lost to fraud related scams in 2017. This is a big problem, especially considering that fraud is only a small fraction of the overall scammers.
Since the internet has grown, there’s a huge growth of people who are making money from scamming others. It’s unfortunate. If you sit back and think about it, every industry has its good and its bad, and the internet is no different.
- 1 The Big Hype With Trends
- 2 Internet Success Stories
- 3 1. Scams Usually Make Unverifiable Claims
- 4 2. They Sell No or Low Quality Products
- 5 3. Scammers Pressure You to Buy in and Stock Inventory
- 6 4. They Communicate Poorly or Avoid Answering Hard Questions
- 7 5. Expensive Ongoing Fees
- 8 6. Bad Reviews Online (and Sometimes even a Bad BBB Rating!)
- 9 7. Deceptive Advertising
- 10 8. Enticing Meetings that Leave out Details
- 11 9. Makes You or Others Feel Uncomfortable
- 12 10. The Income Focuses more on Something Other Than Buying a Selling Products or Services
- 13 Final Words on Internet Business Scams
- 14 Now, it’s Your Turn…
The Big Hype With Trends
Historically speaking, its common for a new trend to get lots of attention, which also creates alot of negative spins.
For example, when sailing across the world was a “new thing”, there was Christopher Columbus who raised funds and returned valuable shipments to investors, and there were others who made claims, but gave their investors no ROI. A few centuries later, the same thing is happening online.
People are saying you can start a business for almost free, work very little, and make a full-time income. Who wouldn’t love the idea of doing what you want to do (“following your passion”), when you want to do it (“lifestyle freedom”), and getting paid more than a job? Most people like the sound of being able to do that at least for some portion of the day.
Then, to top off their claims, they throw in luxury items like expensive luxury cars or race cars, big houses, beautiful vacations, expensive jewelry, and what looks like happiness. They say the “thing” they’re selling you will teach you how to either, 1) Do what they’ve done, or 2) Live a life you want. Most times, these fake “gurus” are scammers paying for ads to sell you something of little to no value.
Assuredly, there are anomalies, but the vast majority of success stories from online do not come from people who invested little money or worked little time.
Internet Success Stories
For example, one great internet success story is Jeff Bezos, the founder of Amazon and #1 on the Forbes list of richest people in the world. He grew up in a middle class family, and had fairly nominal beginnings.
While he had a stable, decent-paying job as an engineer, he decided to quit and flee to Washington state to start a business online. He admittedly says he worked very hard and put in lots of time.
After lots of trial and error, he built an internet bookstore that was bringing in revenue. Once he had proof of concept, investors were willing to put in money, and he raised funds.
Today, Amazon is the product of alot of time, hard work, and money–not the typical “get rich quick” claims, however, it is exciting to think that a business that generates billions of dollars can be built in less than 30 years, right?
Other entrepreneurs like Mark Cuban, Robert Herjavic, and Pierre Omidyar have internet business success stories, but a common trend with them is:
1. Strong work ethic
2. Identifying a problem
3. Creating a timely solution
4. Adding value to the marketplace
The claims of spending little time, making lots of money, and complete lifestyle freedom should raise red flags (especially when there’s no clear message of how they’ve added value to the marketplace). Here’s 10 reasons why…
1. Scams Usually Make Unverifiable Claims
- “Robert from Florida made an additional $5,000/day using our plan”
- “Suzy has traveled all over the world since she implemented our system”
- or, “He makes over $1 million/year without working”…
Are all claims you’d have a hard time verifying unless you found Robert, Suzy, or “him”, and possibly knew their lives before and after. Most people tend to be optimistic and want to believe someone wouldn’t lie, so they assume these scammers are telling the truth, and allow their claims to boost credibility. However, if the claims are difficult to verify, it should be a red flag.
2. They Sell No or Low Quality Products
Some pitch examples include:
“If you give me (dollar amount), I’ll show you how to make money online”
“If you pay (dollar amount) within (a very limited time frame), I’ll let you in on a secret that’s made me thousands online”
“What others won’t tell you, I’ll tell you if you pay (dollar amount)”
Then, later, people who responded to the sales pitch state:
“They took my money, but gave information that could easily be found for free.”
“They said they would share a secret, but everything they shared was common knowledge.”
“The product or service they sold wasn’t worth the money.”
Beware of companies where it’s difficult to prove the quality of their product or service by verifiable reviews or well demonstrated tutorials.
3. Scammers Pressure You to Buy in and Stock Inventory
They say things like:
“Hurry! This opportunity is new and you want to get in before it’s saturated”.
“Inventory is flying off the shelves, so stock up now”.
Or, “You can only sell high ticket items if you’ve bought them”.
One recent example is MOBE or My Online Business Empire. They claimed to sell a 21-step program that would teach consumers to start an online business and make substantial money quickly.
When members would pay the initial $49, they recieved many sales pitches where they’d have to pay thousands of dollays to get the remainder of the steps. Then, once you paid for all the programs and had all 21 steps, members found they were required to sell the program to others to make money.
According to the FTC, consumers lost $125 million dollars to MOBE. Accordingly, you want to beware of any program with “hidden methods”, “secrets”, that heavily pressures you to buy inventory, or that requires you to buy fragmented information.
4. They Communicate Poorly or Avoid Answering Hard Questions
Often times, those who attend the webinars of scammers find they record the event prior, they’re very scripted, they don’t answer questions directly, or they answer questions with fluff. If they make claims, ensure the tactics they share sound reasonable consistent with the claims they’re making.
5. Expensive Ongoing Fees
Another recent internet company that shut down was Empower Network. Unlike MOBE, EN shut down due to bankruptcy, however, many people spent money on high ticket products and monthly fees, but are unable to recoup their money.
In my early Internet Marketing days, I signed up for Empower Network because they claimed to teach you internet marketing. I didn’t stay in it long because I quickly noticed there wasn’t much value for the products and I didn’t like paying nearly $150/mo for a low quality blog and some motivational recordings of the founder.
Like Empower Network, many internet business scams require ongoing fees, and may offer very little value in return.
6. Bad Reviews Online (and Sometimes even a Bad BBB Rating!)
The Better Business Bureau is one of many companies whose mission is to protect consumers. They take complaints from consumers and investigate them by reaching out to the business for a rebuttal or resolution.
If companies respond and attempt a resolution, they are still able to have a high BBB rating. Take Young Living Essential Oils as an example. They’ve been in business for 24 years.
Over a span of 24 years, they’ve had 103 complaints, 34 positive reviews, 25 negative reviews, and 1 neutral review. Even with the amount of complaints, the negative reviews, and an alert for unsubstantiated information in their advertising, they still hold an A rating by the BBB.
If a company has a bad rating by the BBB or others online, you have to investigate further because they may be doing something wrong.
7. Deceptive Advertising
Again, in the Essential Oils industry, there are many ranging standards of quality and no standard to govern the use of many terms. As such, Young Living coined the term “therapeutic grade” to describe their oils, and others followed.
With the term “therapeutic grade” in use, consumers assume an additional quality standard has been kept. Added onto the “therapeutic grade” term, some companies also claim their oils can be applied to the skin at full strength when most practitioners say all oils should be diluted before topical application.
Similar to this deceptive advertising in the essential oils industry, internet business scams will make erroneous claims about how quickly you can expect to start making money or how quickly you can expect to get traffic, and so on.
8. Enticing Meetings that Leave out Details
Internet business scams may use webinars, live events, or other meetings as a part of their sales funnel. MOBE was one such example of a company who used live events to entice consumers.
According to attendees, their events were well decorated, very structured, and presented their claims and pitches concisely. Unfortunately, many details were missing, and you had to pay to put the puzzle pieces together.
Often times internet business scams and offline scams use the power of peer pressure and the power of gathering large groups to appear more credible. Assuredly, because MOBE gathered so many people and had many layge influencers as affiliates, people trusted them.
Unfortunately, the enticing events should have been a red flag rather than a credibility boost.
9. Makes You or Others Feel Uncomfortable
Recently, a family member of mine was invited to a Mary Kay party when a friend became a distributor. When the friend invited them for a facial, my family member informed them they didn’t want to go because they knew they had no interest in buying Mary Kay products.
In response to the discomfort, the friend said, “The facial is for me to practice, not for selling”, so my family member attended. When the facial took place, there were several sales pitches, and the friend’s upline even singled my family member out asking “What factors are holding them back from making a purchase”. The pressure made my family member very uncomfortable and they warned her friend about the sales tactics being taught.
Similarly, other internet business scams require recruiting, selling low quality products or services, and often times, they’ll place so much pressure it makes people feel uncomfortable. While entrepreneurship of varying types can make many people uncomfortable, there are some times when you should listen to what people are saying.
10. The Income Focuses more on Something Other Than Buying a Selling Products or Services
Going back to the MOBE example, after buying all of the products and spending nearly $20,000, customers were taught to sell MOBE products to “make money online” and recoup their money. The original claims MOBE made were related to lifestyle change, making more money quickly, and learning internet marketing, however, the true emphasis was on recruiting others and making commissions.
There are quite a few MLM companies who emphasize recruiting rather than adding value thru products and services, but this is illegal. Other business models also place more emphasis on getting people to join the community or recruiting to make money, but the emphasis of any company should be on adding value by selling products or services that serve as solutions to problems.
Final Words on Internet Business Scams
The goal of this article was to show you how to identify internet business scams. If you’ve been a victim of an internet business scam or you’ve recently seen one, report the scam to the BBB or report it to the Federal Trade Commission. It would be nice to clear the internet of the scammers that pollute it, and conversations like this are a step in the right direction.
If you have questions or concerns about this, don’t hesitate to leave them in the comments section. I’d love to help you out!
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Now, it’s Your Turn…
Have you seen internet business scams? What disguises have you seen scammers use? What would you warn others to avoid in order to stay away from internet business scams? Leave your comments below.