Avoiding Online Scams and Ripoffs

Avoiding Online Scams and Ripoffs

You want to make money online, but how can you tell the difference between scams and opportunities? Choosing wrong means losing money, but can choosing right really mean making money? Are there any legitimate ways to make money online, besides selling your old stuff from the garage?

Yes. There are plenty of online opportunities. But there are many more online scams. So let’s separate the two.

Typical Online Scams

How do you know you are looking at a scam and not an opportunity? Here are some basic tell-tale signs that what you re about to click on is a scam:

  • Just click this one button and make money
  • This software will drive the traffic to your website for you!
  • Order my system and be making $1,000 every month within the next 2 weeks!
  • Basically, do nothing and still make money

If you could make thousands of dollars without any effort, then everyone would be doing it. I mean, why would anyone be spending four years or more in college to end up with $30,000 in loans to go to a job that takes 30 minutes commute, a 40+ hour workweek just to barely have enough money to get by, when all they had to do was purchase a software, a system, and click a button and be making twice as much money!

It’s never been that easy. It never will be that easy. How do I know this? Because I understand basic business and economics. Imagine you have a $100 Visa gift card. You have a room of thousands of people. You offer the gift card for $10. Everyone wants to buy it, if they have enough cash. The next day you walk into the same room and realize how quickly it sold, so you offer it for $50. Everyone still wants to buy it.

This continues until you basically get close to $100 for your $100 gift card. Why? Because the markets are efficient. A golden opportunity will bring lots of people – which will increase the price or decrease the opportunity – until the golden opportunity becomes aluminum – or paper.

Think of opportunity like a parasite for a moment – (just as an analogy, don’t be offended). A parasite will come in and attach itself to the host, without regard to the continuing existence of the host. They will get what they want from the host until the host dies. Then they move on to the next host. Opportunity is similar. We all go to the opportunity (in this case, I suppose we are the parasites and the opportunity is the host!). After the first few parasites attack the host, there is nothing left for the rest of us. There is no more opportunity.

Now, does that mean the first few can actually get something for nothing? Not exactly, but yes, a few people may actually get somewhere. But what are the chances that you will be among the first few out of billions? Some scam artists understand this and they make it sound like you are among the first. But don’t be fooled my friend.

Many of these online scams are presented through live and recorded seminars as well. A colleague of mine in the Internet marketing and professional speaking world, Tom Antion, has an entire site devoted to helping people avoid seminar scams. Live seminars have a way of getting you motivated and emotionally charged so you want to buy whatever they are offering. Just make sure it is legitimate first.

Legitimate Opportunities

So what are legitimate opportunities and how do you distinguish them from online scams? Here is what they look like:

  • You will work really hard
  • You have a small chance of truly exceeding your expectations
  • You have a high chance of failure
  • Others have tried and failed, but a few who really worked hard and stuck it out for well over a year are doing pretty well

As mentioned before, I also understand business. Most businesses fail. Why?

  • The costs are more than anticipated
  • The amount of effort required is more than anticipated
  • The entrepreneur understands their service, but not how to market their service
  • The entrepreneur doesn’t understand the business side of their business
  • Customers are too demanding
  • The product/service is priced wrong
  • Unanticipated outside life events (death, illness, injury, family issues) derail the business
  • Government regulations
  • There are not enough customers
  • The product/service dos not meet he needs (or wants) of the target market

A legitimate opportunity will take some upfront investment, a lot of time, a unique position by you and a lot of hard work. That’s why not everyone owns their own business. Now, is online business any different? Well, yes… but only in 3 main ways:

  1. It costs a lot less to set up an online business because you don’t have to rent physical space
  2. Your potential audience/client base is worldwide
  3. Your potential competition is worldwide

The biggest advantage to starting an online business is that you can do so with very little upfront cost since you don’t need a physical building or warehouse normally – unlike a retailer or a service provider such as a lawyer. The retailer needs a store where you can walk in and browse, and buy the product. The lawyer needs an office where you can meet and discuss your legal matters.

While your audience can be anyone in the world with internet access, so can your competition. You are not competing with the other lawyers or retail shops in your plaza or your town. You are now competing with every other online business similar to yours in the world. So it takes a lot of effort to get noticed out there!

Don’t Be Tricked

Even if you see something on TV, especially if it is a local channel or late at night, because they may have purchased those time slots, that doesn’t make it legitimate. Just because some lady on the opposite side of the country made $10,000 per month with this system doesn’t mean it works. Is she even real? Perhaps she has some special angle that is not available to everyone (maybe she is locally famous already).Or this could still be part of some online scam – they just have enough budget to purchase a TV slot – a budget they may have from scamming lots of people already.

Besides, anyone can make it seem like they have good system if they try it with enough people. For example, I can accurately predict the winner of every football game next season of any team and I can prove it. Do you know how? I can send my predictions to over 65,000 people. But guess what? Each one gets a different prediction, Then when I am correct for one of those individuals, I can get them to talk about how great my predictions were. What you don’t hear are the other 65,000+ people who received my predictions and saw that they were wrong!

Here is what I mean… for just the first two games of a season, I can send my predictions to four different people:

  • Person A – Game 1, Steelers beat Ravens; Game 2, Steelers beat Patriots
  • Person B – Game 1, Steelers beat Ravens; Game 2, Steelers lose to Patriots
  • Person C – Game 1, Steelers lose to Ravens; Game 2, Steelers beat Patriots
  • Person D – Game 1, Steelers lose to Ravens; Game 2, Steelers lose to Patriots

After two games, one of these people think I am amazing for my ability to make predictions… and they would even offer a testimony for it. But the other three people think I am crazy. You just won’t hear from these folks. Now I can use the testimony I receive from the one person who thinks I know what I am doing and use it to sell my “NFL Game Prediction system” to a bunch of gamblers. See how easy it is to trick people?

Is It Worth It?

Is owning an online business worth it then? Of course it is! It can be incredibly rewarding as you see your business growing. You can step back and think, “Wow, I did that. I built that business.” Just like someone creating a beautiful sculpture or painting or building their own garage, you get the sense of accomplishment. And you can profit along the way, which is incredibly rewarding. You are able to offer a better life to your family, a better life for yourself, and you are offering something of value to your clients which helps them live a better life as well.

So good luck on your journey to starting or growing your online business and post in the comments below:

  1. Online scams you have seen
  2. Your progress in your online business journey
The Money Professors are some of the most respected college professors in business, marketing and personal finance. They are highly regarded by their students because of their engaging and entertaining approach to education – along with their ability to take complex information and make it easy for their students. They help students Spend Smart, Earn More and Owe Less. Their online courses are underway this summer and will be available soon. In the meantime, if you would like to learn how you can make money blogging, read more about it here.

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Bill Pratt

Bill is an Assistant Professor of Business at Piedmont Virginia Community College. He speaks on topics related to personal finance on college campuses across the country and is the author of multiple books on personal finance. He left the financial industry to focus on helping people become personally and financially successful. He lives in Charlottesville, VA with his wife and their three pets.

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