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Scam or Opportunity? How to Tell the Difference

Featured image by mohamed Hassan from Pixabay 

Every year thousands of people lose their hard-earned money to a scam of one kind or another. Here we offer an in-depth discussion of how to tell a scam from a genuine business opportunity.

What Makes a Good Business Opportunity?

In 2017 fraud cost American consumers $16 billion. Telephone and Internet scams may rely on time-worn tactics, but they still fool many people into throwing good money after bad.

On the other hand, there are legitimate business opportunities out there, too. You just need to learn to spot them, finance them, and reap the profits.


Learn to avoid the scams and spot a great business opportunity that will return high profits. Here are some questions to ask when you’re not sure:

1. Does the Product or Service Solve a Problem?

Businesses succeed only if the service or product they’re providing is solving a problem people have. This means the product or service will make the lives of consumers easier, not just scam them out of their money.

The first step to answering this question for yourself is to do some research. For instance, run a Google Consumer Survey to determine if its target audience actually wants it.

If people perceive they have a problem and a product that solves it doesn’t exist, but the opportunity you’re investigating does, then what you’re looking at might be a good investment.

On the other hand, if a similar product or service exists, investigate the possible opportunity further. It might not be a scam, but will it be able to compete well in the market?

If you’re seriously looking for an opportunity to invest in, check out this list of trusted business opportunities. The companies on this list have already been vetted for you.

2. Do You Have the Resources to Help the Business Succeed?

Every business needs resources to help it succeed. So when you have narrowed down the list of companies you might invest in to a single one, determine whether you have the resources to ensure success.

More likely than not, you’re going to need a certain amount of capital. Of course, you’ll need an initial infusion of cash to kick start your newfound opportunity. But also be sure to plan for the unforeseen costs that are sure to pop up along the way.

This is where you must be brutally honest with yourself. While it’s natural to get excited about an opportunity once you’ve ruled out the possibility of a scam, do some careful planning and an honest assessment of your resources. Just be certain you’re not getting in over your head.


3. Will the Product Sell in Your Area?

If you are planning to sell the product or service near you, you need to investigate the local possibilities as well.

For example, let’s say you have run across a survey that was conducted in your area. Its conclusions were that, besides coffee, other drinks at local coffee shops also sell well. Let’s further suppose that you have come upon an opportunity to start a bubble tea shop.

Using this survey, along with more research you conduct independently, you are pretty sure your new business will do well.

4. Can You Broaden the Opportunity to a Large Market?

If you’re planning to invest in a business opportunity, your smartest move would be to invest in a product that could serve a large market.

For example, consider a mobile app that many people across the country or even globally can download. Digital products of many kinds can be downloaded multiple times, giving you value for your investment. There are many opportunities like these.

For example, you could invest in affiliate marketing or endorse a product on your blog. Then you would reap a commission every time that particular product is sold.

How Can You Tell If You’re Falling for a Scam?

While excellent business opportunities certainly await, scams also lurk in the corners of the Internet. Scammers don’t take vacations. They hatch their fraudulent schemes relentlessly, and their schemes are often cunning and difficult to recognize for what they are.

For instance, take pyramid schemes. Owners of these schemes, those at the top of the pyramid, make large amounts of money. But the people on the lower tiers only lose. For this reason, pyramid schemes are illegal in many countries.

Pyramid schemes are not the only scams, however. There are other scams. Learn to spot them and avoid them.

Watch for Red Flags

  • One of the most common scams involves a so-called “business opportunity” to work at home. Many of these require you to make an initial investment, ostensibly to purchase the equipment you’re going to need for your new “job.” However, the new equipment never arrives and the new job never materializes.
  • If you ever receive an email that starts with a line that reads, “I have been scammed before, but now I have an opportunity for you,” report it to the authorities. It’s a scam.
  • If you’re looking for rental property, watch out for rental scams. These usually begin on local marketplace sites. You’ll be asked to wire the other party a deposit before they’ll let you view a piece of rental property you’re interested in. All you know is what you see in the scammer’s ad. However, after you’ve wired them your money, they’ll tell you they can’t show you the property because they are “out of the country” or “in the hospital” or they’ve “had a death in the family.” The next thing you know, the phone number they gave you will have been disconnected.
  • Thanks to apps such as Tinder, romance scams have been on the rise. Single people of all ages can be the targets. However, this usually happens to people over a certain age who are lonely or looking for romance. You’ll know it’s a scam if your online romantic partner seems to always need cash from you.

Be Alert for Other Signs of a Possible Scam

  • All charges are presented to you in a lump sum amount
  • The other party offers to let you pay with gift cards
  • They can’t meet you because they are ill or out of town
  • You can no longer reach them by phone
  • They encourage or even insist on escrow payments
  • They want to circumvent the online service’s payment service
  • You cannot find an online presence for their company
  • They ask you to wire them money, and in return they say they will send you a larger sum or equipment worth more than what you’re wiring to them
  • The other party asks you for private identifying information such as your Social Security number or your banking information

You Can Learn to Tell the Difference Between a Scam and a Real Opportunity

The bottom line is do your research. Learn from other people’s experiences so you can avoid getting scammed. Do stay alert for legitimate business opportunities, though. It may be difficult to spot the authentic gems, but they’re out there. Be patient and keep looking. When the time is right you’ll be sure to find them.