Increase in Work at Home Scam and New Rules Passed by the FTC
With more Americans out-of-work, the economic downturn has given work-at-home scammers a boost. The number of complaints about work-at-home scams filed to the FTC grew to nearly 8,000 in 2009 from slightly more than 4,000 in 2006, according to USA Today. The firms often take advantage of vulnerable Americans by offering them the opportunity to make money by stuffing envelopes, doing online searches or assembly or craft work, according to the FTC.
In addition to the unemployed, financial scammers are also increasingly preying on the elderly, a separate USA Today report found. The share of seniors’ financial abuse complaints that were taken up by scams grew from 9 percent to 28 percent of all claims between 2008 and 2010, according to a MetLife financial survey cited by the paper.
The FTC announced new regulations aimed at helping consumers avoid work-at-home scams. The new rule, which takes effect March 1, requires businesses advertising work-at-home opportunities to make certain disclosures, including backing up any claims of future earnings, in a one page document, according the Commercial Appeal.
Dangerous scams of all varieties have popped up since the financial crisis, including mortgage relief scams and employment-related ID fraud. Others have included fake lottery sweepstakes or asking potential employees to pay fees in order to be considered for a job, according to The New York Times
Here’s more detail the Rule:
The Federal Trade Commission announced last week it will reform the Business Opportunity Rule. Under the new modifications, those interested in checking the legitimacy of a work-at-home business venture have the right to inquire about important information such as who the owner is, the business location as well as a phone number—and naturally the business must oblige and release the info requested. If the business refuses, this is a clear red flag.
In addition, under the new rule sellers of at home-business opportunities have to also disclose the following information:
If there has ever been any formal legal action taken against the company or affiliates for claims of fraud or misrepresentation
Information regarding earning claims; in addition to the specific details pertaining to the percentage of employees who make that amount
Contact information for employees who have participated in the work-at-home business for the past three years
As a bonus, those who want to participate in a work-at-home business are entitled to a response to his or her inquiry no later than a week before any sort of employment contract is signed or before money is exchanged.
While the new law is designed to resolve most of the issues associated with work-at -home scams, it does not take place until March 1, 2012.
