FTC FACTSfor Consumers

INVESTMENTS

1-877-FTC-HELP

FEDERAL TRADE COMMISSION FOR THE CONSUMER

www.ftc.gov

Work-at-Home Schemes

Y ou can find ads like this everywhere — from the street light and

telephone pole on your corner to your newspaper and PC. While

you may find these ads appealing, especially if you can’t work

outside your home, proceed with caution. Not all work-at-home opportunities

deliver on their promises.

Many ads omit the fact that you may have to work many hours without pay. Or

they don’t disclose all the costs you will have to pay. Countless work-at-home

schemes require you to spend your own money to place newspaper ads; make

photocopies; or buy the envelopes, paper, stamps, and other supplies or equipment you need to do the job. The companies sponsoring the ads also may demand that you pay for instructions or “tutorial” software. Consumers deceived

by these ads have lost thousands of dollars, in addition to their time and energy.

Be part of one of America’s Fastest Growing Industries.

Earn thousands of dollars a month — from your home —

processing Medical Billing Claims.
Facts for Consumers

Classic Work-at-Home Schemes

Several types of offers are classic work-athome schemes.

● Medical billing. Ads for pre-packaged

businesses — known as billing centers —

are in newspapers, on television and on

the Internet. If you respond, you’ll get a

sales pitch that may sound something like

this: There’s “a crisis” in the health care

system, due partly to the overwhelming

task of processing paper claims. The

solution is electronic claim processing.

Because only a small percentage of

claims are transmitted electronically, the

market for billing centers is wide open.

The promoter also may tell you that

many doctors who process claims electronically want to “outsource” or contract out their billing services to save

money. Promoters will promise that you

can earn a substantial income working

full or part time, providing services like

billing, accounts receivable, electronic

insurance claim processing and practice

management to doctors and dentists.

They also may assure you that no experience is required, that they will provide

clients eager to buy your services or that

their qualified salespeople will find

clients for you.

The reality: you will have to sell. These

promoters rarely provide experienced

sales staff or contacts within the medical

community.

The promoter will follow up by sending

you materials that typically include a

brochure, application, sample diskettes, a

contract (licensing agreement), disclosure

document, and in some cases, testimonial

letters, videocassettes and reference lists.

For your investment of $2,000 to

$8,000, a promoter will promise software, training and technical support.

And the company will encourage you to

call its references. Make sure you get

many names from which to chose. If

only one or two names are given, they

may be “shills” — people hired to give

favorable testimonials. It’s best to interview people in person, preferably where

the business operates, to reduce your risk

of being mislead by shills and also to get

a better sense of how the business works.

Few consumers who purchase a medical

billing business opportunity are able to

find clients, start a business and generate

revenues — let alone recover their investment and earn a substantial income.

Competition in the medical billing market is fierce and revolves around a

number of large and well-established

firms.

● Envelope stuffing. Promoters

usually advertise that, for a

“small” fee, they

will tell you how to

earn money stuffing

envelopes at home.

Later — when it’s too

late — you find out that the

promoter never had any employment to

offer. Instead, for your fee, you’re likely

to get a letter telling you to place the

same “envelope-stuffing” ad in newspapers or magazines, or to send the ad to

friends and relatives. The only way

you’ll earn money is if people respond to

your work-at-home ad.

● Assembly or craft work. These programs often require you to invest hundreds of dollars in equipment or supplies.

Or they require you to

spend many hours

producing goods

for a company that
Facts for Consumers

has promised to buy them. For example,

you might have to buy a sewing or signmaking machine from the company, or

materials to make items like aprons,

baby shoes or plastic signs. However,

after you’ve purchased the supplies or

equipment and performed the work,

fraudulent operators don’t pay you. In

fact, many consumers have had companies refuse to pay for their work because

it didn’t meet “quality standards.”

Unfortunately, no work is ever “up to

standard,” leaving workers with relatively expensive equipment and supplies

— and no income. To sell their goods,

these workers must find their own customers.

Questions to Ask

Legitimate work-at-home program sponsors

should tell you — in writing — what’s involved in the program they are selling. Here

are some questions you might ask a promoter:

● What tasks will I have to perform? (Ask

the program sponsor to list every step of

the job.)

● Will I be paid a salary or will my pay be

based on commission?

● Who will pay me?

● When will I get my first paycheck?

● What is the total cost of the work-athome program, including supplies,

equipment and membership fees? What

will I get for my money?

The answers to these questions may help you

determine whether a work-at-home program

is appropriate for your circumstances, and

whether it is legitimate.

You also might want to check out the company with your local consumer protection

agency, state Attorney General and the Better

Business Bureau, not only where the company

is located, but also where you live. These

organizations can tell you whether they have

received complaints about the work-at-home

program that interests you. But be wary: the

absence of complaints doesn’t necessarily

mean the company is legitimate. Unscrupulous companies may settle complaints, change

their names or move to avoid detection.

Where To Complain

If you have spent money and time on a workat-home program and now believe the program may not be legitimate, contact the

company and ask for a refund. Let company

representatives know that you plan to notify

officials about your experience. If you can’t

resolve the dispute with the company, file a

complaint with these organizations:

● The Federal Trade Commission works

for the consumer to prevent fraud and

deception. Call 1-877-FTC-HELP (1-877-

382-4357) or log on to www.ftc.gov.

● The Attorney General’s office in your

state or the state where the company is

located. The office will be able to tell

you whether you’re protected by any

state law that may regulate work-at-home

programs.

● Your local consumer protection offices.

● Your local Better Business Bureau.

● Your local postmaster. The U.S. Postal

Service investigates fraudulent mail

practices.

● The advertising manager of the publication that ran the ad. The manager may be

interested to learn about the problems

you’ve had with the company.
Facts for Consumers

Federal Trade Commission

Bureau of Consumer Protection

Office of Consumer and Business Education

March 2001

F C EDERAL RADE OMMISSION T FTC OR HE ONSUMER

1-877-FTC-HELP www.ftc.gov

For More Information

The FTC works for the consumer to prevent

fraudulent, deceptive and unfair business

practices in the marketplace and to provide

information to help consumers spot, stop and

avoid them. To file a complaint or to get free

information on consumer issues, call tollfree, 1-877-FTC-HELP (1-877-382-4357), or

use the complaint form at www.ftc.gov. The

FTC enters Internet, telemarketing, identity

theft and other fraud-related complaints into

Consumer Sentinel, a secure, online database

available to hundreds of civil and criminal

law enforcement agencies in the U.S. and

abroad.