By John Breyault, Vice President of Public Policy, Telecommunications and Fraud Millions of Americans are out of work and millions more worried about making ends meet. In the face of this troubled economy, consumers are giving home-based business opportunities more consideration as a way to make additional money. Unfortunately, scam artists often mask their fraudulent schemes as legitimate home-based business “opportunities.” The confluence of bad economic conditions and the proliferation of such scams could be putting many more consumers at risk of falling victim to these fraudulent pyramid schemes. These are the conclusions of a new survey released today by the National Consumers League, produced in partnership with Opinion Research Corporation. Some of the worrying findings of the survey include:
- 31% of survey respondents said that they are more likely to consider a home-based business due to the current economic environment.
- One third of survey respondents couldn’t identify a pyramid scheme as a scam when one was described to them.
- Low-income Americans could be especially vulnerable to pyramid schemes. Among respondents reporting annual incomes below $35,000, 39% were unable to identify a pyramid scheme as a scam, the lowest percentage among income groups surveyed. Low-income respondents were also the most likely (42%) to consider a pyramid scheme as a good source of supplemental income when it was described to them.
- Chain letters were the most common kind of pyramid scheme that respondents reported being approached to join (33%), followed by general pyramid schemes (21%), gifting clubs (12%), and Ponzi scheme (7%).