How to Avoid Getting Scammed as an Online Business Owner

How to Avoid Getting Scammed as an Online Business Owner

How to Avoid Getting Scammed as an Online Business Owner

  • The internet provides opportunities for business owners, but also provides room for scammers.
  • ‘Real Housewives’ star Jennifer Shah has been sentenced to 6.5 years in prison for defrauding business owners.
  • An entrepreneurship professor shares her tips for avoiding potential online scams.

The world of online business is increasingly complex. More and more founders are launching digital brands such as virtual assistant services, social media agencies, and coaching companies. But with the rise of online brands also comes the rise of online scams.

This month, a judge sentenced Jennifer Shah, a star of “The Real Housewives of Salt Lake City,” to six and a half years in prison for a telemarketing scheme that defrauded thousands of victims.

According to NPR, Shah was selling client contact information, which she obtained as victims invested in bogus business opportunities and spent money on services such as website design and tax preparation.

“There’s a difference between ‘business coaches’ and ‘business opportunities,'” wrote Cynthia Franklin, adjunct professor of entrepreneurship and director of the Berkley Center for Entrepreneurship at New York University Stern, in an email.

Business coaches – a community that is also growing on social media – provide advice and mentorship. Meanwhile, “business opportunities,” which often focus on instant financial success, “have greater potential for abuse,” Franklin said.

With digital businesses on the rise and more people looking to earn a side income to prepare for a possible recession, Insider has gathered tips on how to avoid scams when starting an online business.

Beware of false promises and pressures that indicate a scam

When starting a business, it can be tempting to sign up for services and programs that promise increased sales, more customers, or instant growth. Indeed, the hashtag “#businesscoach” appears more than 5.3 million times on Instagram and has more than 302 million views on TikTok.

But if a service makes promises like “guaranteed income, big returns, or a ‘proven system,'” that may indicate it’s a scam, the Federal Trade Commission said.

“Trading opportunities focus on a financial outcome in a relatively short period of time,” Franklin said. “The biggest red flag to avoid is someone trying to get you to make a financial commitment on first contact without giving you time to think.”

Legitimate coaches may offer incentives to “act quickly”, but there will never be pressure to do so, she added.

Additionally, “any product or service that doesn’t offer a trial period or the ability to roll back if you change your mind” could be fraudulent, Franklin said.

Check out potential coaches

Certainly, coaching programs can work for entrepreneurs looking for specific guidance on ideas they need help with, problems they’re looking to solve, or assignments they’re passionate about, Franklin said. If that’s the goal – not just making a quick buck – a licensed coach can be helpful. But the online coaching space is unregulated, which means there is no set of required classes, courses, or degrees that coaches must obtain in order to work with clients. This makes it difficult to find a qualified trainer, Insider previously reported.

It becomes especially important to check all customer claims and reviews for potential trainers.

“As with any transaction, you should always read the privacy statements, terms of use, or other documentation regarding how your data will be collected, stored, and used,” Franklin said.

Next, referrals and reviews should describe specific results and list first name, last name, title, and the company they founded so you can research them and determine if a legitimate customer wrote the referral or review .

Finally, Google can help you find any legal complaints about the product or service provider.

If you are unsure about the digital coaching industry, there are alternative options for business growth. Franklin suggested founders join support groups like Business Network International, alumni networks, or industry-specific trade associations to connect with trusted people you can trust.

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