Odds are you’ve seen e-mails, infomercials, or social media ads encouraging you to start an online business, earn money from investing, or make enough money to retire early just by using their “system” and working from home.

Lots of people are looking for ways to earn extra money, but a lot of them are finding out the hard way these offers are nothing more than scams disguised as legitimate business offers, coaching programs, and investment opportunities.

How can you tell if it’s a scam?

While there are plenty of legitimate online businesses and coaching programs out there, they’re greatly outnumbered by the scammers. Some of the biggest red flags to watch out for are offers that include:

• Guaranteed income
• Larger than average returns on your investment
• A “proven system” to succeed

The offers can be very appealing, and you may think about dipping your toes into one with a free or low-cost “system” to get your business started. Before you click, remember the scammers hook you with the free/low-cost offer, but it can quickly turn into a money pit – their “mentoring” or other services will promise to increase your business’s success, but often leave you deep in debt.

Here are a few examples of the types of scams to watch out for:

Online business coaching

The ads for this type of scheme will claim you can make big money with no experience because they have “experts” who will teach you their “proven method” for building a successful online. Often, they’ll claim to be affiliated with well-known online sellers, but it’s objectively false.

They’ll also say things like:

• “You can make 5-6 figures if you follow our system.”
• “Learn from the experts how to generate income.”
• “You can be making money now. Guaranteed!”
• “Our students make between 50% to 100% return on their investment in the first year.”

In scam coaching programs, these promises are often false and unsupported by evidence. Hundreds of thousands of people have learned this the hard way. They invested all of their hard-earned money just to be left with nothing but debt and broken dreams.

Real estate seminar and investment coaching scams

There was a time in the not too distant past the infomercials for this type of scheme were everywhere. Now they’re more prevalent online, but the scam is the same.

They lure people in with free seminars where so-called real estate investment or securities trading “experts” brag about their impressive track record and the success of their “students.” The enthusiasm at these seminars makes it seem like a great way to learn how to make enough money to change your life. But these schemes use made-up success stories and statistics. They claim you’ll get a guaranteed return on your investment, or stress how “cutting-edge” their technique is.

The big red flag here is they’ll try to rush you into making a quick decision with no time to do any of the due diligence required to make a sound decision. They’ll insist that you must sign up before you leave the seminar. If you sign up, you’ll most likely discover what you paid for is worthless.

Pyramid schemes

Pyramid schemes are everywhere. They hide under the umbrella of “network marketing” or what was previously called “multi-level marketing.” While there are legitimate companies out there using network marketing as their business model, consumers should carefully evaluate opportunities because some may function as illegal pyramid schemes.

Pyramid schemes recruit you with pitches about what you can earn. They’ll say you can quit your job and get rich by selling their products and getting others to sell for you “downline.”

The red flag here is if the real focus is on recruiting others, rather than selling the product. Real network marketing focuses on the product. Pyramid schemes focus on recruitment to keep a constant stream of new distributors flowing into the business, but the only people who ever make any real money are the ones at the top of the pyramid.

Pyramid schemes can look remarkably like legitimate network marketing business opportunities. But if you become a distributor for a pyramid scheme, you’ll be involved in a scam that can cost you even more than the money you invest. It will end up costing you the trust of any of the friends or family you recruit because they will lose all their money, just like you. Depending on the scam, some may end up deep in debt.

How to Avoid Business Offer and Coaching Scams

Here are some tips to help you avoid the scammers before you pay for a business opportunity or coaching program:

1. Take your time and talk to someone you trust. Scammers pressure you to act now or risk losing out. Get a second opinion from someone who has your best interests in mind before you sign up. Talking about it could pull the veil from your eyes and help you see the scam for what it is. You can also get legitimate business development advice and counseling through agencies like the Small Business Administration and it’s SCORE program.

2. Do some research. Search online using the name of the company (or product line) combined with words like “review,” “scam,” or “complaint.” You can also check with your state attorney general for complaints. Just keep in mind that even if there are no complaint, it doesn’t guarantee a company is honest. (They may not have been around long enough to generate complaints.)

3. Read success stories and testimonials with skepticism. They might not be true or typical. Glowing stories of success could be fake or misleading, and positive online reviews may have come from made-up profiles.

4. Check out your coach’s credentials. There’s no licensing requirement to become a business coach, but there are certification programs. Business coaching scammers often lie about their credentials. Do some online research about the type of certification your business “coach” says they have. If they say they are certified by XYZ, go to the XYZ website and see if they’re listed. Then do some research to make sure XYZ is a legitimate certifying organization.

5. Be ready for the upsell. If they ask you to pay even more money to help your business succeed, STOP. Take time to talk with someone you trust before you give them anything else – refer back to tip #1.

What To Do Before You Join a Coaching Program or Buy a Business Opportunity

Anyone who sells honest business opportunities will be able to give you detailed information. Sit down and ask yourself some very specific questions, like:

• What would I be selling or doing?
• How and why would shoppers find and use my website?
• How would the business generate income?
• What would my specific expenses be? Can I afford it?
• When would I expect to turn a profit?

Get clear answers to these questions before you consider paying for any business opportunity, no matter how good it sounds. If they try to tell you that you don’t need to understand all the details “it’s a turnkey system,” or because their supposed experts (or coaches or mentors) will “take care of everything for you” – don’t believe it. Profitable “turnkey” businesses are so rare they’re almost non-existent.

Scammers want you to give up your credit card or bank account information first and ask questions later. They know if you do some research, you might find reports of rip-offs and back out of the deal. Indeed, a quick internet search often is enough to show you alarming complaints. A good place to start is ripoffreport.com.

Honest business opportunities don’t need to use high-pressure sales tactics — an offer that’s good today should be good tomorrow.

Report Fraud

If you suspect a business offer or coaching program is a scam, tell the FTC at ReportFraud.ftc.gov.

You can also report it to the attorney general’s office in the state where you live, as well as the state where the scammer is based.

Remember the old adage

Ask any successful business owner and they will tell you that running a business takes a lot of time and effort – and there is no “magic system” to make a business succeed overnight. So remember, if it sounds too good to be true, it probably is.

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