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5 'Make Money Online' Scams to Watch Out For: How to Avoid Rip-Offs and Actually Make Money Online

Updated on June 26, 2017
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Jorge has a long history of building tiny websites on shoestring budgets. He's always on the lookout for cheap ways to make fun projects.

Make Money Online Scams

There are few things that people chase more in this modern age than money. It's not even that we're necessarily greedy; it's natural to want an easier solution to all of life's financial problems.

What if you could work in your pajamas? What if you could wipe out all of your debt with a high-paying job that requires little education? What if you could be the envy of the neighborhood with your new fancy car?

Surprisingly, this is actually possible. It takes a lot of work, though--more work than most people are wiling to do. In addition, you'll have to swim through a sea of scammers who are trying to sell you on a dream.

When you're first looking into making money online, you may not know who to believe, so take a look at these common scams first before you dive in. I will also offer some alternatives below each one that actually can make you money:

There are tons of scams out there for people who want to make money online.
There are tons of scams out there for people who want to make money online.

Scam #1: Multi-Level Marketing

Multi-level marketing (or MLM) is actually an ancient scam that has recently had an explosion in popularity thanks to the internet. You might have heard it referred to by a few names and euphemisms, such as "network marketing." Though I would hesitate to say that all MLMs are 100% a scam, most of them are at the very least a bad business idea and at worst an all-out con.

What is multi-level marketing? Well, it all starts when you see an ad online or are even contacted by a friend. Either way, someone has an "exciting business opportunity" for you.

The way the business works is that you peddle an overpriced product and also try to recruit people to work under you. You make a percentage of what your recruits make, and a percentage of what their recruits make, and so on. All you have to do is buy a huge starter kit for hundreds of dollars and keep buying a steady supply of the product from month to month.

Pretty soon, you'll have dozens of minions working for you and all you'll have to do is sit back and drink your margaritas on the beach. As long as you're at the top of the pyramid, life is good.

Wait, what? A pyramid?

Yes, that's right. Nearly all MLM businesses are little more than disguised pyramid schemes. The products are overpriced and you'll find yourself having to struggle to sell them to your friends and family. Worse still, you have to put up a bunch of money upfront to get into the business.

Many MLMs will emphasize the idea of "recruiting" people so that you can make tons of money from the people under you, but that is basically a Ponzi scheme. You're making money from these people buying your overpriced starter kit, and they're making money from people below them doing the same. Eventually, the system implodes if there's no actual good product, or the product is overpriced (which it usually is).

Even if you can make some money from a specific MLM (which is rare, but I have seen people do it), it is not the ideal place to put all of your efforts. Why? It's not a long-term sustainable business that you own. You are putting all that energy into getting customers for someone else. With an MLM, you don't have the freedom that comes with a real business:

  • You are tied to one supplier, so you can't change manufacturers to save money or improve quality.
  • Prices for the "wholesale" product are often inflated, so your profit margins will be low.
  • You are limited to the line of products that the MLM provides.
  • You are competing directly with other people who are selling the same exact thing to the same exact audience? Why would your friend buy from you when Joe Blow also sells the same exact brand of makeup for the same price with the same sales material?
  • You will never have your own brand.

If you want to build a real business, then you need more control. You could potentially make a lot more money selling your own products. The learning curve is definitely more steep, but that's the price you pay for something that might actually be worth the effort.

A Legit Way to Actually Make Money Online Instead: Sell Private Label Products

If you're already willing to put up an investment of hundreds or thousands for an MLM "starter kit," then you might as well spend that money on something that can actually make you hundreds and thousands per month back.

Private labeling is when you make your own brand of product, buy cheap from a manufacturer (usually overseas), and sell it for a profit to end users. By cutting out the middle man and all the BS that goes with MLM, your margins will be much, much higher.

Obviously, this takes a lot more thought than joining an MLM does. You need to do research and learn from your early mistakes. You would probably do well to buy some training on the basics, but most of what you will learn will be from trial and error. This can be a scary thought and it may not seem so appealing in the face of an MLM company that seems to have all the answers.

The truth is, though, by getting into private label products:

  • You truly own your own business.
  • You own your own brand.
  • You have control over the supplier.
  • You have control over nearly every aspect of the product.
  • You decide what your prices are.
  • You decide what direction you want to go in.

These days it's easier than ever to get in touch with a factory and have your product built from the ground up. It doesn't have to be complicated. You don't even have to sell on your own website at first. Amazon and Ebay can be great places to start. Just make sure to do market research before you spend money on anything.

Falling For False Promises

Have you ever been suckered into a scam?

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Binary options are basically like gambling.
Binary options are basically like gambling.

Scam #2: Binary Options

A "binary option" is basically when you bet on whether the price of a stock or currency will be X amount at Y date and time. It is binary because you were either right in your prediction, or you were wrong; you either make some money or you lose it all.

Binary options are not legit ways to make money online because they are pretty much gambling. You'll probably lose money, especially if you're inexperienced. Heck, even very experienced traders lose money all the time in the stock market and regularly perform worse than robots. What makes you think that you'll be able to figure out how to come out on top with binary options? If you do, it will be pure luck.

Even worse, a lot of binary options websites are outright scams. You will lose your money no matter what you do because the company will just take it.

A Legit Way to Actually Make Money Online Instead: Become an Affiliate for an Investing Company

Instead of flushing your money down the toilet with binary options, if you're interested in the financial markets, why not join an affiliate program for a financial company?

Affiliate marketing is when you send leads to a company and they pay you a cut of what they make from these customers. Don't confuse this with "network marketing," which is a euphemism for MLM and requires you to pay money to join and recruit other people under you. Instead, affiliate marketing should be free to join and you should simply make income based on how many people you send to your partner.

There are affiliate programs and just about every industry, but the financial industry can be particularly lucrative. Just make sure that the company is legit. Do your research. You don't want to send innocent people to a scam artist company, and you certainly don't want to get scammed yourself.

As a rule of thumb, real investment companies won't offer unrealistic returns, and instead focus on long-term wealth that is built slowly through compounding interest.

Become a blogger instead. It is more fun and can make more money if you do it right.
Become a blogger instead. It is more fun and can make more money if you do it right.

Scam #3: Pay to Work for Pennies Writing / Transcribing

While this is less of a straight-up scam and more of a rip-off, many websites that disguise themselves as freelancing services aren't much more than an online sweatshop. Some of them are outright scams as well, though.

There are tons of people out there eager to make money writing, and that's great. What's not so great are websites that pay you a song and a dance for hours of work. If you're working three or four hours writing or transcribing, and you're making like five bucks, consider an alternative. If you're going to work for so little, you may as well spend that effort building your own business instead of lining someone else's pockets.

Occasionally, there will be a freelancing site that has you pay up front for the privilege of working. Maybe they have an option for you to give them money to get more work or to receive a higher rate of pay. This is just silly. Avoid these thinly-veiled scammers.

A Legit Way to Actually Make Money Online Instead: Make Your Own Content Website and Monetize It

If you like to write, consider making niche sites and monetizing them through some means. You can put ads on them or affiliate offers--or you might even make your own product. The most important part of the equation is content, and instead of writing content for someone who will throw some pennies at you, why not write the content for yourself? You'll also be able to decide what you want to write, which is a plus.

Just make sure to do your research first. You don't want to get into an over-saturated niche or a niche that won't make any money. Learn the ropes and get educated. Blogging can definitely make you some money if you're willing to stick with it.

Scam #4: The Savings Account That Gives Ridiculous Interest

If you're into the bitcoin scene especially, you'll notice tons of offers to double or triple your money easily. Just deposit your cryptocurrency into this account and you'll make 30% per DAY. Best of all, this interest compounds!

Sounds too good to be true, doesn't it? That's because it is. Your first clue is that you have to do basically nothing to make the money. If nothing--to research, no risk, no work--is involved, and yet the returns are huge, then it's a scam.

A Legit Way to Actually Make Money Online Instead: Open Up a Real High-Yield Savings Account

Believe it or not, many online savings accounts give better returns than the brick and mortar banks that you're used to. Some of them offer an APY of more than 1%. This may not be very exciting, but if your money is just sitting there anyway, it may as well earn interest.

Also, a lot of financial institutions these days offer bonuses when you open an account. This may not be a bad way to start saving.

Making money online often requires learning new things about technology.
Making money online often requires learning new things about technology.

Scam #5: Buy Our Course and Become a Billionaire

Never underestimate the importance of education. It is true that there is tons of great training out there, some of which will help you earn money online. If you need to learn the technical aspects of something, such as how to build a website, how to find customers, how to have effective marketing, then it makes sense to pay for a course or an ebook.

Every once in awhile, someone will also share with you a great idea that might spark your next business. Maybe they'll show you some concepts in affiliate marketing that work really well for them, or maybe they'll show you how to build a website that can generate a lot in ad revenue.

Unfortunately, the sad truth is that much of the material out there is also useless and a total rip-off. If someone is claiming that they'll give you a fool-proof system that will make you hundreds of thousands of dollars in a few months, they're either exaggerating or are simply out to scam you.

Again, if the "system" you're being sold really works that well, why are the creators giving away all their secrets? Signs that a training course is a scam includes:

  • Exaggerated claims.
  • Poor grammar and spelling on the sales materials.
  • Suspiciously fake-sounding testimonials.
  • Their photos of "real customers" who found success are a bunch of royalty-free stock images.
  • The promise that you don't have to do any work.
  • Income that requires no set-up on your part, yet is somehow on "autopilot."

It is possible to make money "on autopilot," but this requires substantial research and work upfront to achieve. Beware of those who promise something for nothing.

A Legit Way to Actually Make Money Online Instead: Use Free Resources to Learn About Lucrative Methods

99% of what you need to learn to make money online is available for free online. You don't have to buy anything to get started. Buying a course to make things easier or to show you advanced methods later on can be great, but when you're first starting out, make it a point not to pay anything (unless it's for something obvious, like inventory).

Most of he valuable lessons that you will learn will come from experience anyway. Join forums that have to do with making money online and leverage that free knowledge to get started, then learn from your own mistakes and successes.

If you do want to buy a course anyway, be sure to ask around to see if it is any good. Don't just go by random reviews online. These are almost always sponsored if the seller has an affiliate program. Ask people who will make no money from your buying the course.

This is why it's important to build a network of people around who who are into making money online or just entrepreneurship in general. They can give you unbiased ideas and advice.

Conclusions

Basically, if you get nothing else out of this article, remember this: Don't buy anything. If a company is asking you to pay upfront for an "amazing opportunity," don't do it. Unless you're buying inventory or services to build your own business, don't believe the scammers out there who want to sell you a dream.

© 2017 Jorge Vamos

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