What is an online scam and how to avoid one
The internet has become a great place to do business and has created many new ways of doing business. Unfortunately, there are also many new ways for people to rip others off.
Phone scammers or others were limited in the number of people they could reach, but this has all changed and made much easier for them to reach larger number of victims than ever before.
I want to discuss some basics when it comes to scammers. First what is an online scam, types of online scams, signs of scams online, and my top recommendation when it comes to doing business online.
What is an online scam?
If you ask 10 people this, you may get 10 different answers. The main theme will be the same. A scam is anything someone can do to take your money and not deliver what was promised. Whether you are looking for a product, service, or just information. If you don’t get what you paid for and expected, then it could be a scam.
I’m not saying everything that you have ever purchased that did not turn out the way you wanted, that it was a scam. If I bought a book to teach me something and others learned from it, but I didn’t, was this a scam? Not at all. Some things work for some people and not others.
Just be careful when you are looking at an online opportunity. As the old saying goes, if it sounds too good to be true, it probably is.
Types of online scams
There are many types of scams before the internet came along. Crooks always get creative when it comes to figuring out ways to make fast cash and will modify the old scams to work online. Sometimes even better than before! I will discuss some types of scams that are used to lure people into parting with their money.
- Pyramid schemes – this is an old scam where the people at the top of the pyramid will make the most money. Others will make money as more people are brought into the pyramid and more and more levels are added. Eventually people start slowing down coming into the system since there are no real benefits to being there such as products or services. Some charge an upfront fee or monthly fees to be part of it, but eventually it falls apart and those that started it disappears. (SEC)
- Ponzi Schemes – some are similar to a pyramid scheme, but not all. In a Ponzi scheme current investors or participants are paid from the monies that new participants invest. As long as new investors are continually being brought into the system, or the founders really know what is going on. As in a pyramid, when new investors stop adding money to the system, it will fall apart. (SEC)
- Get rich quick schemes – in my opinion, this is the most popular one. An offer is made how you can make lots of money quickly online. The smart scams will only charge a small amount to get started, then the amounts keep growing the further into the system you get. This way they can get more out of their victims over time. Others charge a large up-front fee and may provide something in return, but it is way over-priced at best. Want to pay $1,000 for a $10 book or piece of software?
- ID theft – when you start an online business, keep track of what information and who you provided it to. This may help to identify sources of how charges appeared on a credit card, new accounts opened in your name, or any other possible opportunities that someone can use personal information for.
- Multi-Level Marketing (MLM) – not all multi-level marketing programs are scams. They can resemble a pyramid scheme, but a real MLM does provide legit goods or services. I like the concept of MLM’s and their marketing plans. I have been involved in a couple of them since I believed in their products, but after a while, I realized that wasn’t for me. The reason I listed it here is to let you know that some pyramid schemes will disguise themselves as MLM’s and you will need to do your homework on it before you get involved.
There are many other types of scams, but these are the common ones related to someone who wants to start an online business. I will be doing reviews in the future on some of business opportunities, but keep in mind that there are a lot of them that will come in go every year.
Signs of a scam
Here are a few things that will immediately raise red flags when I look at something:
- Showing large amounts of cash
- Showing expensive sports cars
- Showing yachts full of pretty young girls
- Showing luxury homes on the beach
- Promising huge returns on investments
Granted, just because they show these things doesn’t mean that it’s a scam. To me, they are just signs that it could be.
Why else would you need to show these? Sure, you could be saying look what I did, but really? It might just be me, but I doubt that they even own those items and they’re not props that they rented for their ads.
At the least, if you are interested in the idea, then do plenty of research first. The legit ones may offer a free trial or a low-cost way to start. Be careful if you provide a credit card and you cancel the program or system before you are billed for anything that you don’t want.
My top online business recommendation
Now that we have discussed what scams are, let’s talk about one online opportunity that is not a scam. I am referring to Wealthy Affiliate. Here is where I started learning the ropes of an online business. How to create a website for free, how write articles and product reviews, how to market my site, and so much more.
Worse case, you go through some free training and learn something. Like anything, you will get out what you put in.
We have discussed what a scam is, some types of scams out there, warning signs of a scam, and I even mentioned where I learned to create a legit online business.
I hope you found this information helpful and have provided you with a few things to think about. Remember when you look at any business opportunity, do your own research. Sure, some people will say it’s great and others will not, but you will need to form your own opinions.
Thank you for reading and best of luck in your searches.