by Joseph Slife for Sound Mind Investing

For many of our forebears, home wasn’t just a place to live — it was a center of commerce. Whether by running a cottage industry or a family farm, our ancestors earned a living not far from where they ate and slept. Work began moving away from home during the industrial revolution. Now, in the information age, work-at-home jobs are gaining new ground. In this article, we examine several work-at-home options — and alert you to common work-at-home scams.

Every morning, I roll out of bed about 6:30, take a shower, eat breakfast, read from the Word, and head to work. In my case, work is about five steps from the kitchen. I am among the estimated 20-30 million of Americans who work from home.

Some of us work at home full-time. Others do it part time to supplement the family income. Some work for specific employers. Others work as freelancers. Still others operate their own home-based business.

Working from home isn’t new

Working from home isn’t new, of course. Family farms have been around as long as the human race has existed. More recently, European merchants of the Middle Ages often had their shops on the first floor of their houses, and their living quarters upstairs. In the 18th and 19th centuries, women often were engaged in cottage industries involving sewing and spinning.

But most of us grew up in situations in which “work” was some place other than at home. Work was at the office across town or at the factory several miles away.

Even so, work-at-home businesses have never gone away completely, and with the advent of inexpensive computers and high-speed Internet connections, many tasks that used to be done in “traditional office” space can now be done in “virtual” space. The Web also has simplified the product-ordering process for people involved in home-based direct sales, and has lowered the “cost of entry” for budding entrepreneurs who can now create businesses with a worldwide reach on a shoestring budget.

It isn’t for everyone

While working from home is enjoying a new heyday, don’t get the idea that home-based work is for everybody. Frankly, some people simply aren’t cut out for it. Working from home, especially on a full-time basis, demands that one be an organized, self-starting, goal-oriented perfectionist with limited need for social contact! Knowing your way around a computer helps too.

But the big catch is the job itself. What can you do from home and earn a living? “Aye, there’s the rub,” as writer Will Shakespeare once penned. In this article, we’ll offer an overview of some popular work-at-home opportunities, as well as a few you would be wise to stay away from.

Work a little, earn a lot?

A Google search on “work at home” yields about 1.8 million results, some touting intriguing pitch lines such as “Earn $500-$1000 per day” and “Mom Makes $5K/Month at Home.” Guess what? Most such ads are simply scams dressed up in work-at-home clothing. Christine Durst, cofounder of Staffcentrix, a virtual-careers training company, estimates that more than 98% of advertised work-at-home ideas are either “outright scams or downright suspicious.” (Durst’s company screens online job offers and rates them at RatRaceRebellion. Another site that investigates work-at-home ideas is IveTriedThat — their slogan: “We lose money so you don’t have to.”)

Durst recently told ABC News that the number of scam offers has spiked over the past year. “We’re definitely seeing an escalation, and the escalation, of course, is coming because there’s demand,” she said. “People are looking for extra income.” And scammers are looking for new victims.

As the old saying goes, “Forewarned is forearmed,” so here is a rundown of just a few of the work-at-home scams you’re likely to run across if you’re searching for a way to make money from home:

Rebate processing.

This one seems plausible (scams often do). After all, someone has to process all those UPC codes and other paperwork that people send in to get rebates.

But this is often a bait-and-switch scam. After you send in your $200 to get started in the rebate-processing business, you’ll probably find out that what you’ve actually done is sign up to be an “affiliate marketer” for whatever product the company wants you to sell. If you sell something, then you get to process the rebate forms that your buyers send back in.

So, yes, you will be processing rebates, but not quite in the way you envisioned. (By the way, the rebate money will come out of what you earned on your sales, so every time you process a rebate, you lose part of your earnings. Ouch.)

Mystery shopping.

Not all mystery shopping jobs are scams. There are companies (particularly those with franchise operations) that pay people to shop at specific stores or eat at particular restaurants and then report back about their experience. This gives the companies helpful feedback about quality control.

But the mystery-shopping scam is a bit different. In the scam version, the unsuspecting shopper is told to provide feedback on a Western Union or MoneyGram outlet. The scammer sends the newly hired mystery shopper a check, along with instructions to deposit it in the shopper’s personal bank account. Then the shopper is instructed to go to a Western Union or MoneyGram outlet and wire a portion of that money (drawn from the shopper’s bank account) to a particular location.

The scam: The initial check turns out to be fraudulent, so the shopper has just wired his or her own money to the scammer (who is never heard from again).

Google cash.

This one, promoted on hundreds of web sites, goes by many names: Google Money Tree, Google Profits, Google Money System, Fast Cash with Google, Google Home Business Kit — you get the idea.

The pitch varies from site to site, but is often something like this: “Hi! My name is Cindy Ward, and I’m a stay-at-home Christian mom in Greenville, South Carolina. I’ve discovered how to make a great part-time income using my computer from home! I work about 15 hours a week and bring in an extra $1,300/week on average. I can stay home with my three wonderful kids and still make money, and anybody can do it!” (One site with the “I’m-a-stay-at-home-Christian-mom” pitch advertises heavily on conservative blogs, targeting conservative Christians who are ripe for taking the bait.)

Other “Google cash”-type sites target workers who’ve been laid off: “A few months back, I lost my job as a boring account rep for a manufacturing company. But now I make $5,000+ a month on Google. You can do the same.”

Still others target people who’ve been burned by scams: “I got so frustrated with all the work-at-home scams that I was ready to throw in the towel. Then I discovered how to make money with my own Google business.” Scam sites routinely acknowledge that scams are rampant. It’s one way they try to gain your confidence (“I got scammed four times before I finally found a legitimate way to make money online.”) These “Google Cash” sites often seem disarming, with family photos and chatty copy.

Signs of a Rip-Off

Usually there are comments posted from folks (smiling photos attached) who signed-up and now have found out “just how easy it is to make money online.” One site notes that “BusinessWeek recently published a story about all the people making money with Google” (while failing to note it was about people earning big returns on Google stock).

Somehow it all seems too good to be true. And it is. Poke around a bit and you’re likely to find the fine print. This is from an actual site promoting a make-money-on-Google scam: “All persons mentioned on this blog are fictional examples…for demonstration purposes only.” What? Cindy, the stay-at-home Christian mom with three wonderful kids, isn’t real? “The statements contained herein come from many different people and are not necessarily being made about the specific products discussed.” All those endorsements from folks thanking Cindy aren’t really about Cindy and her money-making program?

Well, at least the fine print is honest. Unfortunately, many people don’t read the fine print. They take the bait and sign up. After all, Cindy seems so nice and the sign-up fee is cheap — only about $3 — so what do I have to lose?

The “honest” fine print addresses that, too. “After 14 days, you will be charged a monthly fee of $47.50 for…membership. After the 30-day trial [you] will be charged $99 for the program…. You may stop payment on any pre-authorized charge by notifying [us] at least three business days prior to the scheduled charge date.” Unfortunately, there is no clear contact information listed on the site, so finding a person to contact about stopping your monthly payment of $47.50 (and your $99 fee) may be a bit difficult.

By the way, a lack of contact information on a “make-money-from-home” site is a red flag. When there’s no clear way to contact whomever is running the site, that is usually a pretty good indicator you’re dealing with a scammer. Even if there is contact info, don’t assume everything is okay. Check it out. If an address is listed, look it up on Mapquest or Google Maps. See if it really exists. If there’s a phone number, call and find out who answers.

More scams.

According to the Federal Trade Commission, other common work-at-home scams are related to medical billing (“There’s a severe shortage of people processing medical claims!”), envelope stuffing (“For a small fee, we’ll tell you how you can earn money stuffing envelopes at home!”), and assembly and craft work (“You can assemble products at home in your spare time!”). In each case, the only one making any money on these deals is likely to be the scammer, who happily accepts your sign-up fee and the money you send in for a “start-up kit” — and then disappears.

What’s legit?

So much for scams. Are there any legitimate home-based work opportunities out there? Yes.

Call centers

For example, home-based call-center agents now account for nearly one-fourth of all call center agents in the U.S. and Canada. According to the recently published book Undress for Success (playing off the idea that you can work from home in your PJs), “all of the more than 200 people who answer the phones for JetBlue Airlines work from home in locations all over the country…. [And] LiveOps’s 16,000 call center agents field everything from restaurant takeout orders to insurance questions, all from the comfort of their homes.”

Call-center jobs typically involve order taking, ticketing, general customer service for banks and insurance companies, and even tech support. Some companies also are using work-at-home agents to support customers via e-mail and live chat.

But getting a call-center job isn’t easy. “[T]he number of job applicants for home-based positions far exceeds the number of jobs available,” note authors Kate Lister and Tom Harnish in Undress for Success. LiveOps, for example, receives more than 150,000 job applications a year. From that number, only about 4,500 people are hired. To make the grade you must be computer savvy, demonstrate a professional-sounding telephone manner, and have a quiet workspace (no barking dogs or noisy children). And, of course, you need your own computer, a high-speed connection, and perhaps a dedicated phone line. (For call center job leads, check out RatRaceRebellion and Sykes.)

Virtual assistant

Another legitimate work-at-home job is the “virtual assistant” (VA) — the telecommuting version of a secretary or administrative assistant. The job of a virtual assistant, like that of the VA’s office-based counterpart, is “making the boss look good” by taking care of details. On any given day, a virtual assistant’s duties might include proofreading, data entry, building a PowerPoint presentation, scheduling appointments, and sending out thank-you notes.

According to Undress for Success, many VAs work for real estate agents, doing tasks such as preparing listings, arranging inspections, maintaining a web site, and even helping agents build a presence on social networks such as Twitter and Facebook. Some VAs work for multiple clients. As you might imagine, this can create quite a time-management issue, so VAs must be excellent organizers. (To learn about becoming a Virtual Assistant, visit TeamDoubleClick and VIPdesk.)

Personal concierge

Another home-based field that is growing is the “personal concierge” business. This type of enterprise focuses on taking care of tasks and errands people don’t want to do (or don’t have time to do) for themselves. These range from gift buying (either online or in person) to event planning. If you’re organized and resourceful — and can land some well-moneyed clients — this kind of work can be quite lucrative.

Virtual teacher

Are you academically inclined? You might consider becoming a virtual teacher or tutor. This is a rapidly expanding field, as schools (even at the elementary, middle, and high school level) increase the number of online classes being offered.

Of course, a big roadblock to getting a job as an online K-12 teacher is state certification. Almost all states require their virtual teachers to have the same teaching certifications as traditional in-class instructors. At the college level, online instructors typically are required to have a graduate degree and prior experience in teaching.

So if you think you’d make a good teacher but don’t have the prerequisites (or even if you do), you may want to look into online tutoring, providing one-on-one help to students struggling with specific subject areas. (For online tutoring jobs, check Smarthinking, TutorVista, Tutor, and Craigslist — under “education.”)

Direct Sales

Even before the Web revolution expanded work-at-home opportunities, millions of people were earning money from home-based businesses affiliated with direct-sales giants such as Avon, Mary Kay, and Amway (the Amway brand returned to the scene in recent years after being rebranded as “Quixtar” for several years).

According to the Direct Selling Association (DSA), such businesses are as popular as ever. In 2007, the DSA estimated that about 15 million Americans were working in direct sales, almost 90 percent of them women. (Worldwide, the sales force tops 60 million people, working as representatives of more than 200 direct-sales companies.)

In addition to the companies mentioned above, other firms that partner with home-based entrepreneurs (this is only a small sampling) include The Pampered Chef (cookware/kitchenware), Usborne (books), Tupperware (food containers), The Longaberger Company (baskets/kitchenware), Melaleuca (nutritional products), and Shure Pets (pet care products).

Multi-level sales model

Many direct sales businesses are built on a model known as multi-level (sometimes called “network” or “matrix”) marketing. The business owner (i.e. the home-based businessperson) earns money from direct sales to customers, as well as claiming a percentage of the revenue earned by “downline” sellers that the owner has recruited to become part of the company’s sales force. While there is nothing inherently wrong with this model, there are a couple of common pitfalls with these types of businesses. Consider the following two examples.

Andy Willoughby’s 3-Step Plan recruits its sales force by advertising heavily on Christian and conservative-talk radio (Willoughby’s folksy ads always include the line, “How in the world are you anyway?”). Although the 3-Step Plan does market a product (Xango juice), the product is clearly secondary to the idea of “owning a business” and “earning additional income.” In fact, Willoughby’s radio ads don’t even mention the product.

The purpose of the radio ads is to generate a steady stream of “prospects” that can be turned over to existing distributors for telephone follow-up, thus helping distributors grow their “downline” organizations (“Hi, Fred! I’m calling because you responded to one of Andy Willoughby’s ads on the radio. That was you, right? Terrific! So you’re looking for a way to make money from home?”…).

The Reverse Funnel System

A second business opportunity advertised heavily on radio — this one by self-proclaimed “beach bum” Ty Coughlin — is something called The Inner Circle. There are variations operated by other people, but all are based on a marketing approach known as the Reverse Funnel System. The “system” requires potential recruits to pay $50 just to get information about what the business does, thereby winnowing out all but the most interested people right from the start. (A funnel turned upside down — with the small hole at the top—would limit what could pass through. That’s what Coughlin’s system does; thus the name, reverse funnel.)

Prospects willing to pay the $50 upfront free are then given a hard sell about how they can generate a $1,000 commission on each product sale, not only on sales made directly but also on sales made by each person in one’s “downline.” (In this case, the product being sold is a time-share-like resort-vacation package.) But, of course, you can’t start earning those $1,000 commissions unless you sign up — which costs about $3,000.

While you have to be careful when evaluating direct-selling business opportunities, that’s not to say there aren’t good ones out there. Just keep in mind that whether it’s cosmetics, containers, or some other product, the operative word in any direct sales business is “sales.” For such a business to be successful, products must be sold. (Indeed, according to the Federal Trade Commission, the sale of actual products is a key aspect that distinguishes multi-level marketing from illegal pyramid schemes.)

Success

Success in direct sales, therefore, requires sales talent, product-line knowledge, and the ability to keep track of the administrative side of the selling process. Those most apt to do well are detail-oriented people with outgoing personalities. Further, in a multi-level business, becoming highly successful requires knowing how to recruit, mentor, and motivate other salespeople.

Of course, many people who enter direct-sales businesses aren’t really looking to earn a full-time living. They simply want to generate a certain level of supplemental income. If that’s your goal, and you’re able to build up a small but loyal clientele, a direct-sales business could be just the thing to add several hundred dollars to your income every year (and allow you to get personal discounts on products to boot).

Questions to Ask

Keep in mind that there is a “cost of doing business.” In direct sales, that cost is likely to include the purchase of kits, catalogs, and product samples. You might even be required to maintain an inventory of products. So be sure you understand the cost commitment, not just the profit potential, before you sign on the dotted line. (Also realize that you assume some legal liability in becoming a product distributor, as explained at the Federal Trade Commission.)

The Write Stuff

“Few occupations are better suited to working anywhere than writing,” write the authors of Undress for Success (who, as you might guess, wrote their book from home). “Even before the advent of the Internet, a writer equipped with a typewriter and a mailbox or a courier service could click out a living from home.”

Perhaps the best arrangement for a work-at-home writer is to be employed full-time by a specific publication, such as a magazine, newsletter, or website. But that kind of arrangement is likely to come about only if you have a previous connection with the employer.

Freelance

Another option for a home-based writer is to work as a freelancer. “The problem with freelance writing for a living — and, for that matter, any freelance income — is that as soon as you finish a project, you’re unemployed again,” note Kate Lister and Tom Harnish in Undress for Success. “Good writers will spend at least as much time chasing work as they do words.” So if you’re going to be a freelancer, you’ll need to be a good self-promoter as well. (Sites that connect freelance writers with clients include Guru and Upwork.)

Blogging

Another niche for home-based writers is launching a blog (short for “weblog”). The best bloggers have a deep knowledge base about a niche topic and can develop an audience of readers who visit their blog regularly. While anyone can start a blog, only about 2 percent of bloggers actually earn a living by blogging.

It’s tough work

1. becoming an expert in an area that…

2. people want to read about regularly and…

3. writing about it well enough that they come back often, but it can be done.

Finding Work-At-Home Jobs

In addition to checking the websites previously mentioned, here are a few more sites that may help as you search for a work-at-home job: Indeed aggregates job listings from newspaper classifieds and other sources; Craigslist features jobs posted directly by employers; CorpsTeam focuses on jobs that offer flexible working conditions; and TJobs lists telecommuting jobs (the site charges a one-time $15 to gain access to complete listings). Still more sites are listed at Undress4Success (click the “Find Work” tab).

Conclusion

Working from home has its share of rewards — many of them nonfinancial. For example, a five-second commute is great. But get rid of the mistaken idea that money will roll in while you’re relaxing in your easy chair, eating popcorn and watching reruns. A work-at-home job requires real…work! You’re simply not likely to earn $1,300 a week while working just 15 hours. And for most people, a work-at-home job is going to involve some type of selling. So if you decide to pursue a work-at-home job, be realistic about the effort required, as well as the costs that will be incurred and the potential profit that can be made.

The good news is that it is possible to make money from home if you have the right set of skills and are willing to make a genuine effort. You might not get rich, but you may be able to earn a decent living or supplement your other income.

And perhaps you will better be able to appreciate the lifestyle of those far-away forebears whose workplace and homeplace were the same place.

© Sound Mind Investing

Published since 1990, Sound Mind Investing is America’s best-selling financial newsletter written from a biblical perspective.

Originally posted 3/22/2012.