Signs That A Business Opportunity Might Be a Scam

There have never been so many opportunities to build a small business as there are today, but unfortunately some of them are scams, and even legitimate opportunities are often being promoted by people who fail to mention the risks or potential downsides involved.

If you’re looking to join a network marketing company, for example, you need to be wary of scam companies, but also of eager marketers who are just trying to hit targets rather than be honest about the details of their opportunity.

The key to finding a legitimate offer is to keep your guard up and investigate the claims being made. If it sounds too good to be true, it usually is.

Avoid taking anything at face value and investigate all the costs. Many times, there are considerable start-up costs that are only mentioned in the small print, if at all. And promises regarding potential earnings are often highly inflated.

Signs That A Business Opportunity Might Be a Scam

Watch out for these signs that you might be dealing with a scam

Any business opportunity that claims to be ‘turnkey,’ ‘easy,’ ‘automatic,’ or claims to involve little or no work should be examined with skepticism. In business, almost nothing works unless you do, usually very hard, especially in the beginning.

Vagueness is a warning sign. If the offer is vague enough that you don’t even really understand what’s involved, that’s usually a sign to stay away. Companies with legitimate offers want to give you all the details. They are proud of what they have to offer and want to tell you about it.

The revenue stream doesn’t make sense. How does the company make money? Do they primarily make revenue by charging you for training, advertising, product, a website, and other fees? If they’re not profiting, then they wouldn’t be making the offer. If you earn when you sell (such as in many network marketing companies), make sure that you’ll still be earning after you’ve paid for postage, packing and all your other expenses.

Someone is offering to teach you to do something they don’t seem to have done. There are some amazing coaches and educators out there, in every area, but be wary of the following:

  • Business coaches who don’t seem to have a business degree or experience of working for or building any actual businesses
  • Writing coaches who don’t seem to have any publishing credits
  • Wealth coaches who don’t seem to have any money

You get the idea. People have heard that coaching and online education are big business, and they are jumping on the bandwagon with no regard for whether they actually know how to do what they claim to be teaching.

There are no actual success stories. You might find the company literature or marketing material uses a lot of  words like “possible,” “can,” “may,” or “potential.” It’s understandable companies don’t want to over-commit and make guarantees, but they should at least be able to show you case studies of people who have been successful with them.

The people offering the opportunity are located in some obscure country. Legitimate opportunities can come from anywhere, but if the company in question is located in another country, especially one where you’re unfamiliar with the laws and business practices, there’s reason for additional caution.

An offer talks more about the magical marketing than the magical product. A great business opportunity has a great product, exclusivity, or a great brand behind it. The marketing should come second.

Ads in newspapers and magazines that have little information besides outrageous claims and a toll-free number. Just because the ad is in the Wall Street Journal doesn’t mean it’s legitimate.

Always protect yourself. There are several ways to check on the legitimacy of the company in question. You can contact your state’s Attorney General and the Better Business Bureau. Just remember that a lack of complaints isn’t a guarantee that you aren’t being scammed.

Be especially wary if you find articles that ask “Is X company a scam?” then answer it with a long article saying how great the company is. This is how scam companies hide the fact they are a scam. By placing in-depth articles that will dominate the search results if people search to see if they are a scam.

If you feel that you were taken advantage of by a network marketing firm, vanity press, or any other kind of company offering a ‘business opportunity’, ask for your money back. If that doesn’t work, let the Attorney General’s office or relevant authority in your country know what happened. Provide any relevant correspondence.

When faced with a business opportunity, move slowly and be cautious. If you are pressed to make a quick decision, that’s probably a good reason to say “no.” Keep an eye out for the warning signs and protect your money.


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6 thoughts on “Signs That A Business Opportunity Might Be a Scam

  1. This is such good advice, Karen!! You know, I have wondered about those “is this a scam?” posts. I do think it’s good for businesses to tell you how they will help you with marketing after you join, though. And if they are network marketing businesses, they should be good at online marketing, not just parties.

    1. Yes, it’s surprising how many network marketers don’t seem to focus on online marketing. They focus on live events, parties, selling to friends and family, but rarely seem to suggest blogging or content marketing. Unless things are changing. But a lot of my MLM friends tell me they’re not!
      Karen recently posted…7 Easy Ways to Grow Your Email ListMy Profile

  2. Article that raise awareness like this is really commendable. Thank you for sharing those signs for business owners to be aware of the things concerning their businesses. All the best!

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