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Consumer watch: stay-at-home businesses could be stay-at-home scams

Feb 04, 2013 Missy Rogers

People hoping to make a living through stay-at-home businesses may find themselves with greater interest in short term lending or alternative credit strategies. While the need or desire for extra income becomes a generalized sentiment throughout the United States, all types of people are finding themselves considering build-your-own-business plans created and marketed by third parties - but many can turn out to be scams, according to Bloomberg Businessweek.

Investing in a business that never was
The news source reports stay-at-home mom Maranda James found herself paying for over $10,000 in products and services before realizing the work-from-home business she had invested in was nothing more than a money-making scheme run by people who never intended to help her profit. While her chance to avoid falling into debt has passed, individuals considering such ventures and the credit organizations they work with should be wary of signs of fraud, as a financial hit to consumers is ultimately a loss to collection agencies.

Legitimate organizations, says Business Insider, should provide thorough education of one's position, never encourage recruitment as a business owner's number one priority and should overall ring true to consumer intuition - essentially, the business opportunity should seem more realistic than unbelievable.

Seeing through the smoke
Still, some companies out to take advantage of hopeful entrepreneurs may seem even more established than small local businesses, reports Bloomberg BusinessWeek.

According to the publication, first contact with a scammer can be telling of whether they are out to help you or themselves.

“Have you ever owned a business before?” James says in her interview with BusinessWeek. “The first time you tell them no, not really, they go in for the kill then. You have absolutely no idea what you need.”

If this trend continues, collection agencies might begin to see more new business owners accruing debt based on scams rather than individuals' flawed business budgeting.