Side Hustle Scams to Avoid: Warning Signs and How to Protect Yourself

When you're looking for ways to earn extra money, every legitimate opportunity seems to come with a few scams hiding in the mix. Scammers know that people searching for side hustles often want flexible work, quick income and opportunities they can do from home. They design fake jobs and 'business opportunities' to look exactly like the real thing. Learning to recognize the warning signs can protect your money, your identity and your time.

Common side hustle scams

Fake job offers are one of the most common scams. You may receive an unexpected message offering a job, often with high pay for simple work. After a quick or nonexistent interview, you're asked to pay for training, equipment, a background check or a starter kit. Legitimate employers don't require you to pay to start working.

Fake check scams are especially damaging. You're hired for a job, such as being a personal assistant or mystery shopper, and you receive a check. You're told to deposit it, keep part as payment and send the rest to someone else, often for supplies or to another 'employee.' Days or weeks later, the check bounces, because it was fake. By then, you've sent real money that you'll likely never recover, and you may be responsible for the full amount to your bank.

Reshipping scams ask you to receive packages at your home and forward them to another address. These packages are often purchased with stolen credit cards, and you could end up involved in a crime without realizing it.

Task or 'rating' app scams have become common. You're told you can earn money by completing simple online tasks, like rating products or apps. At first, you may see small earnings in your account. Then you're asked to deposit your own money to unlock bigger earnings or withdraw what you've made. Once you deposit money, it disappears.

Business opportunity scams promise big profits if you buy a starter kit, coaching program, course or inventory. They often feature testimonials of people earning large amounts, but the real money usually goes to the people selling the program.

Red flags to watch for

Many scams share common warning signs. Be cautious if you're hired without a real interview or after only a brief text or chat conversation. Be skeptical of any opportunity that asks you to pay money upfront to get started. Earnings that sound too good to be true usually are. Pressure to act quickly, before you have time to think or research, is a classic scam tactic.

Requests to pay with gift cards, cryptocurrency or wire transfers are especially concerning, because these payment methods are hard to trace and nearly impossible to reverse. Legitimate businesses rarely ask for payment this way.

A note about multilevel marketing

Multilevel marketing, or MLM, companies recruit people to sell products and to recruit others to sell as well. Not all MLMs are illegal, but the Federal Trade Commission has found that many people who join earn little or no money, and some lose money after buying inventory, starter kits and required products.

If an opportunity focuses heavily on recruiting other people, requires you to buy products or inventory to stay active, or makes big promises about income, research it carefully. Many MLM companies publish income disclosure statements, which often reveal that most participants earn very little. Reading these disclosures before joining can be eye-opening.

How to protect yourself

Research any company before accepting a job or opportunity. Search the company's name online along with words like 'scam,' 'complaint' or 'review.' Look for an official website, a physical address and real contact information.

Never deposit a check and send money back to anyone, no matter how legitimate the situation seems. If someone overpays you and asks for a refund of the difference, it's almost certainly a scam.

Protect your personal information. Don't share your bank login details, and be careful about providing your Social Security number until you've verified that an employer is legitimate. Real employers will typically need this information for tax purposes, but only after you've been properly hired.

Before paying for any opportunity, talk it over with someone you trust. A second opinion from a friend or family member can help you spot problems you might miss when you're excited about earning money.

What to do if you've been scammed

If you think you've been scammed, act quickly. Contact your bank or payment provider immediately, since they may be able to stop or reverse some transactions. Change passwords for any accounts you may have shared. And report the scam.

You can report scams to the Federal Trade Commission at ReportFraud.ftc.gov. Reporting helps the FTC and law enforcement track scams, warn others and take action against scammers. If your identity was stolen, visit IdentityTheft.gov for a personalized recovery plan.

Staying safe while you earn

Most side hustle opportunities are legitimate, and with a little caution, you can avoid the ones that aren't. Trust your instincts, take your time and remember that real opportunities don't require you to pay upfront or rush into a decision.