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High Unemployment is a Golden Opportunity for Work-from-home Scammers

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With unemployment at near-record levels and many people looking for opportunities that will allow them to earn income without having to leave the house, work-from-home scammers have an unprecedented amount of potential victims. LegitScript has observed and reported merchants that appear to be engaged in work-from-home scams, and as unemployment across the country persists, this predatory activity is likely to grow. In this blog post, we outline what to look out for so you can keep these scammers out of your portfolios and off your platforms.

Online work-from-home scams are a subset of get-rich-quick schemes and are nearly as old as the internet itself. Job offers are marketed through a variety of means: unsolicited email, spammy ads on websites, social media posts, and even on legitimate job listing websites. These scams operate by promoting job opportunities that require an upfront investment, such as supplies, classes, or coaching. Victims pay hundreds, thousands, and sometimes tens of thousands of dollars for supplies, software, or training that either never materializes or is extremely substandard.

Work-from-home scammers and the companies that process payment for them can face intense regulatory scrutiny and substantial fines. In 2018, the Federal Trade Commission (FTC) charged three individuals and nine businesses with bilking more than $125 million from thousands of consumers with a fraudulent business education program called MOBE (“My Online Business Education”). In 2020, the FTC went after top MOBE affiliates and, ultimately, pursued action against Qualpay, the operation’s payment processor. The Commission alleged that Qualpay ignored obvious red flags, including questions about where MOBE was located, the nature of MOBE’s business model, MOBE’s history of excessive chargebacks, and claims MOBE made that consumers could earn “hundreds of thousands of dollars per year.” A settlement with Qualpay imposed a monetary judgment of nearly $47 million.

The potential influx of work-from-home scammers, combined with the prospect of heightened regulatory scrutiny, make it important for payment service providers to quickly identify and remove these merchants from their portfolios. Below are red flags that may indicate that a merchant is at an elevated risk for engaging in a work-from-home scam.

 

Red Flags to Watch Out For
  • The opportunity states that little or no skills or experience are required.
  • The offer sounds too good to be true by offering high pay for little or no work.
  • There are testimonials from others that make outrageous claims about income.
  • The employee is required to pay upfront for supplies, training, certifications, or other materials.
  • There is a history of excessive chargebacks.
  • The organizational structure of the business is confusing or complex, or basic information about the company, such as its principals or headquarters, is unclear.
  • There are complaints about the business on third-party consumer complaint websites.

 

Work-from-home scams are just one of many kinds of fraudulent or deceptive practices that put payment service providers and members of the public at risk. Want to read about some of the others? Download our Deceptive Marketing Guide to learn more.

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