How to Spot a “Start an Online Business” Scam

There are so many legit ways to make money online and it’s true that virtually anyone can start a business on the internet. It’s much easier than it was even 10 years ago, but that doesn’t mean you won’t have to put consistent effort into building and growing your business.

Online business scams often feed on your desire for fast, easy money. However, it does take time and effort to build a business online, just like it does offline. If anyone tells you any differently, run in the other direction.

Most people know they should put their guard up when they encounter ‘get rich quick’ schemes, but scammers know that too. Many do everything they can to appear legit. They know that most people who are interested in their “offer” don’t know much about starting a business online and they take advantage of that. They often try to make it look easy without actually saying it is.

How to Spot a “Start an Online Business” Scam

The following tips will help you identify which online opportunities are legit and which ones need to be investigated further to verify their legitimacy.

1. Can you easily contact the company? When you do, will they answer your questions or use sales tactics to steer you away from your concerns? Ask tough questions and only accept straight answers.

2. Elusive businesses with tons of hype are always a red flag. They don’t offer a lot of (or any) information about the company you’ll be dealing with (or even what exactly you’ll be doing), but OH the money you can make! It quite often starts by getting you to sign up for a webinar or offline event. They specialize in getting you all pumped up to a point where you’re so busy focusing on all the easy money you’ll make, you won’t notice you’re being swallowed by a scam.

3. The same goes for ads. If you see an ad in a Facebook group or elsewhere that doesn’t state what the business is and how they earn money, ignore it.

4. Cookie cutter websites and turnkey systems that set you up with a basic site that you can use to start an online business. They usually promise to do everything for you, all you have to do is pay them and abracadabra! You’re a money-making machine. You’ll pay more than you would if you set it up yourself and you’ll get a lot less. There are legitimate services that set you up online and make it easier for you to get started and operate, like eCommerce platforms. It’s a good indication you should dig deeper though.

5. If they ask for money to join an ‘affiliate program’, chances are you’re going for an expensive ride. Legitimate affiliate programs don’t charge you money for the dubious privilege of promoting their product or service. You’ll quite often find shady tactics in the terms of ‘affiliate programs’ too. I just found one of those recently. The terms included a payment threshold, which isn’t unusual. The trick was, if you didn’t meet the payment threshold in a few months, they’d take whatever amount of money you did manage to make. That’s not an incentive, it’s theft. If they don’t like your performance, they should remove you from the program and pay out what they owe you.

6. Thinly-disguised MLM (Multi-Level Marketing), ponzi or pyramid schemes will push recruiting people over the sales of products or legitimate services. There’s nothing wrong with building a downline (team), but it shouldn’t be the primary income generator. There are compensation and sales strategies that resemble MLM, but aren’t considered as such by law. If it appeals to you, it’s fine to join after careful vetting. Even legitimate affiliate programs can look like MLM, but it’s just a method of compensation based on sales commissions.

“When operating within the limits set by the Competition Act, multi-level marketing is a legal business activity with set responsibilities for both operators and participants,” states the Competition Bureau. “However, pyramid schemes are illegal multi-level marketing plans that require purchases for participation, compensation for recruitment, inventory loading, or the lack of a buy-back guarantee on reasonable terms.”

7. Income claims featuring ‘real people’ who have made a fortune. It isn’t unusual for a select few to make a ton of money with schemes, but that certainly doesn’t mean you will too.

8. “All you have to do is recruit five people and you’ve paid for the program.” That may be true, technically, but it’s a good indication that they’re focused more on recruiting than selling a product and that rarely ends well.

9. Easy money rarely exists in legitimate businesses. If you see ads such as “Make $$$ posting ads on Facebook”, filling out forms, searching the internet, or other promises of easy money, it’s likely a scam.

10. Training, membership sites, conventions or any other ongoing ‘investment’, should have you on high alert. There are many legitimate membership sites, training programs and events, but when combined with other warning signs you should keep your wits about you.

11. Pressure tactics that try to get you to ‘buy now’ or lose out in some way. Urgency and scarcity are legitimate marketing tactics. However, if you feel pressured to buy in before you’re ready and don’t have time to properly research the opportunity, don’t do it.

12. Low quality or stolen content can tell you a lot about any site (and the people who own it). You can often pick up on it when you read it, because it won’t flow as it should from a writer with actual expertise on the topic. These ‘experts’ simply run around the internet copying information. They’ll usually attempt to reword it (typically using software), which can result in some laughable inaccuracies. If they lack the expertise and experience to create their own high-quality content, they’re not someone you should be taking advice (or buying products) from.

The Consequences of Online Business Scams

  • Obviously, you’ll lose money and may damage your reputation.
  • Google knows about scams and the minute they associate you with one, you’re doomed to fail. The same applies to email service providers, who can block IP addresses or keywords and send your emails straight to a spam folder or block it before it reaches the intended recipient.
  • It’s entirely possible that the ‘program’ is illegal in Canada. If you’re actively recruiting others to sign up for a pyramid scheme, for example, you’re breaking the law. The punishment is severe, with hundreds of thousands of dollars in fines. If you’re convicted of fraud, you’ll probably end up incarcerated as well.

Success is the Best Revenge

The saddest part of scams isn’t the money people lose, it’s that they may never try again. If you’ve been scammed by an online business scheme, don’t give up! There has never been more legit opportunities to make money online than there is right now. You’ve learned a valuable lesson that will help you find them.

✔ You may also be interested in reading:
10 Low-Cost, Part-Time Businesses you can Start Online from Home
Checklist: How to Start a Profitable Online Business in Canada
How to Start Any Online Business With WordPress

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Assistant Editor at | Website | + posts

Marie has an M.Sc. in Marketing and a certificate from the Ryerson Digital Media program. She's enrolled in one course or another most of the time and is always in the middle of a new business book (or three). Marie enjoys writing, traveling and volunteering at local events & trade shows.

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Rick Rodriguez

Very informative! Thanks for sharing!

Rishi Raj Singh

Hi . Very informative.
I am interested in in opening online business in Canada . Please guide me in how to start that .
Regards
Rishi Raj Singh