The Internet is a wonderful resource that can provide a wealth of information and bring tremendous opportunity to make money. It allows people to have an audience of millions and provides entrepreneurs with potential customers at a relatively small cost.

However, sometimes it’s difficult to determine if the information on the Internet is genuine or accurate. The Internet can also be used by scam artists to make themselves wealthy by taking advantage of the gullible.

Here are some of the common ways that people lose money by trying to make money on the Internet:

The ‘just-sign-up-people-and-make-money’ scam

Network or multi-level marketing (MLM) is a legitimate form of promoting and distributing a company’s products and services. The MLM concept rewards the company’s loyal customers for encouraging others to become buyers.

Word of mouth advertising is a powerful marketing tool – who hasn’t gone to see a new movie or tried out a restaurant which was recommended by friends? The difference is that an organized MLM system pays you for your promotion efforts.

However, scammers have used the MLM structure to create elaborate pyramid schemes, and have helped to give the marketing concept a bad rap. The key to differentiating a genuine MLM opportunity against a fake one is to look at the source of the commissions and returns that are promised.

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If the offer rewards you for just signing up new people, without any need to sell a product or service, this is definitely a scam. There must be some worthwhile exchange of value – is the product or service something people desire? Do the promised rewards seem excessive? Is the source of all the money questionable? Stay away if it seems too good to be true.

The ‘I-have-access-to-lots-of-money’ scam

“I am Dr. John Brown, a government official of….. I urgently need your help in a matter of the utmost secrecy. Due to the political unrest in my country I am unable to retrieve my father’s legacy of US$25m left to me two years ago. Your assistance would help me to get the money out of the country. All you need to do is allow me to wire the money to your bank account and you will collect 25 per cent of his fortune for your kind help…”

If you have an internet account, your inbox has probably been bombarded with similar-sounding emails. The scam works like this: before the money can be wired to you, you have to pass on secure information about your bank account, which then allows the criminals to empty your account.

Another twist is that you have to send money to them first to allow them to remit the money to you. Just delete these emails without wasting time to read them.

The ‘work-at-home-and-get-rich’ scam

Over the last year, the number of offers to help me stay at home and make a fortune has intensified. I wondered why people persist in sending out these emails, until it occurred to me that they must be successful, or they would have eventually stopped. The noticeable email increase could also be attributed to the large number of layoffs from the downturn in the American economy.

These scams prey on low-income earners, stay-at-home mothers, the recently redundant, and the sick and disabled by offering them simple-sounding strategies to make money from home. There are legitimate home-based businesses, but you can spot the fraudulent ones by some of these characteristics:

– You have to buy a starter kit to assemble craft items that you can sell for high prices. Unfortunately, your artistic efforts are rejected and you are stuck with the useless products.
– You pay money upfront and are promised a career in processing emails or bills. Once you’re in, you realize that the only way to make money is by encouraging others to pay up and join in the scam too.
– You pay a fee to receive a list of companies that employ persons who work from home, but the list you get has only generic company names.
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The ‘invest-a-little-and-make-a-fortune’ scam

Recently, a client introduced me to a new ‘investment’ scheme which promised huge returns for just placing US$50 in the plan. Once you found six other investors, then your earning potential skyrocketed. Despite my protests that this was obviously a scam, he maintained that it was only US$50 and the scheme was new, so his chances of coming out ahead were good.

These investment scams easily hook and reel in thousands of people all over the world with the promise of a lot of returns for little money and effort. The premise is clever as you don’t have much to lose anyway. Usually they allow new members to receive the windfall, so that they can enthusiastically encourage others into the net. Multiply US$50 by millions of gullible easy-money seekers and you will realize that the designers of these scams are the only ones that stand to gain.

There are many other types of scams abounding on the Internet. Before you spend any money, check out the offer carefully. Place the company name and the word ‘scam’ into the Google search engine, and see what your investigation reveals.