There are lots of scams such as phishing emails, the Nigerian eMail scam and so on. Those are real scams that hurt a lot of people, but they are not the subject of this web site. I focus on internet business scams --programs that are designed to get you to part with your money.

1. Drop Ship Wholesale Web Sites

This is one of the leading scams on the internet. These companies prey on eBay sellers and web site owners who are looking for inventory to sell by dropshipping.

Some of the leading drop ship scams are:
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I used to put the names here, but these companies are now suing anyone who criticize them as a way to intimidate people into not mentioning them. Unfortunately this works because even if you are right, it costs too much to defend yourself from these frivolous lawsuits.

How can you tell if a drop ship site is a scam?

I have been around the internet a long time and I have lots of personal experience with drop shipping. You can drop ship profitably if you deal with direct sources. Here is what to look for and what to avoid:

The website will have logos of famous name brands they claim to have. Believe me, companies such as Gucci, Rolex, Apple, Coach and other famous brands do not deal with these middleman drop ship warehouses. When you see a website loaded with lots of famous name brand logos, I suggest you avoid it.

The next thing to look out for is a membership fee. Later on this page I am going to recommend a service that helps you find real dropshippers and they charge a one-time fee for access to their service, but I recommend you avoid companies who want you to pay a monthly fee.

The next thing to look out for are companies that want you to enter all sorts of personal info including phone number and set up an appointment to speak with one of their “consultants.” This is a popular scam where you are called by a high-pressure telemarketer from a boiler room who tries to talk you into a program costing as much as $5,000. If they can't sell you a program, they make money by selling your contact information. This is called the Lead Generation Business.

It is very difficult to make any money on eBay or the web working with these drop shippers. Because they are all nothing more than middlemen and most of them actually make money by selling you a worthless web site or charging you a monthly fee for the service.

The next category are the companies that sell you a web site complete with drop ship products you can load into it. Although many of these are not outright scams, it is very hard to make money with them. The problem is that the only way you can drive traffic to the website is with expensive pay-per-click advertising. Because these companies sell hundreds or even thousands of these essentially identical web sites, they are hard for people to find in a Google or Yahoo search.

In my opinion, the only way to drop ship profitably is to work directly with a manufacturer or a manufacturer’s rep or direct distributor --and none of these companies have that relationship. Click on the link in our navigation area to Drop Shipping Web site Programs, where you can read more about this scam and get the name of one company that can actually connect you with manufacturers. But if anyone wants to charge you a monthly membership fee, or sell you a drop ship web site, run the other way.

2. Website Traffic Scams This is a very complicated and vicious scam. It usually starts with an email to your website or even a telephone call from a sales person who claims to be able to deliver traffic to your web site. Sometimes it involves search engines you never heard of or some deal where you install a tool bar on your website. They claim that millions of people have installed these toolbars. The amazing thing is that you do start getting traffic. But, when you look at your web site stats, you see that the clicks just go to one page and leave –usually within a second. What is happening is that you are getting clicks from a robot. No one is actually seeing your website. You are impressed with all the traffic but wonder why you are not getting sales.

3. Multi-Level Marketing

We often see popular multi-level or network marketing programs listed at online scam reports. Indeed several of these programs are scams --but many are not and people complain about them because they couldn't make money at them. The truth is that most honest MLM programs do work --some of the more famous ones include Mary Kay, Tupperware and Herbalife. The problem is that they really take a lot of work and most people do not have the entrepreneurial and/or sales skills to be successful.

On the other hand there are some MLM programs being promoted on the web that have no chance of succeeding. We are researcing and will be listing them here as we find them.

Watch this space as we will be adding new online business scams as we come across them.

In the meantime, Here are some tips for avoiding scams:

Tip-offs to Fraud

Read online ads and "conversations" with a healthy dose of skepticism. The same signals that tip you off to potential frauds in print and on television are apparent in cyberspace. Here are some warning signs of questionable online advertising:

1. Overstated claims of product effectiveness. Use of hype titles and frequent use of the word "hot" to describe an investment opportunity can indicate a scam.

2. Any web site that asks you to fill out a form with all of your contact info including address and phone number.

3. Exaggerated claims of potential earnings or profit.

4. Claims of "inside" information.

5. Pump and Dump" promotions of cheap stocks promising high returns.

6. Promotions for exotic investments such as ostrich farming, gold mining, or wireless cable TV.

When you make any decisions about investments or products, be careful. Check a variety of sources and references before you buy.

Skip McGrath www.skipmcgrath.com blog.skipmcgrath.com