How to spot a side hustle scam: 10 red flags, each backed by a consumer regulator

Anyone searching for a side hustle will eventually meet a scam, because the people running them target exactly that search. They do not look like scams. They look like a course, a coach, a "business in a box", or a job offer that arrived by text. The sensible response is to carry a short list of red flags and run every offer against it.

We lean on official sources here, not our own opinion. Each flag below is backed by guidance from the US Federal Trade Commission (FTC), which we fetched and read. The FTC is a US regulator, so its rules apply to sellers in the US, but the questions it recommends work anywhere. Where we use our own board of 370 researched online business ideas as a yardstick, the figures are medians and estimates of potential, not earnings. How we research explains the sums. We name no companies.

What are the 10 red flags?

1. You are asked to pay for the work itself

The FTC's job scam advice is blunt: do not pay for the promise of a job. A placement firm that wants a fee, especially one in advance, is a warning sign. Paying for tools you will use is a separate matter. Paying a person for access to work is the flag.

2. The product is training, a kit or a certificate

The FTC says people end up paying for starter kits, so-called training or certifications that turn out to be useless. If the main thing for sale is the education, ask what a customer of the business, not a student of the course, pays.

3. Big money for little work, quickly

The FTC lists claims that you can make a lot of money in a short period with little work as a sign of a job scam. Measure the claim against reality. In our research, only 28 of 370 ideas (8%) reach a first dollar within two weeks, and the median is about four to five weeks.

4. "No experience needed" or "no risk"

The FTC says businesses cannot make false, misleading or deceptive claims about the earnings you can expect. It also says they cannot misrepresent that you do not need experience, or that buying a money-making opportunity is risk-free or involves little risk. Every real business has risk, and almost all need some skill.

5. Pressure to decide now

The FTC lists a company saying you must act immediately as a warning sign, and advises avoiding companies that discourage you from taking time to study them. A real opportunity will still be there next week.

6. The money comes from recruiting

In the FTC's guidance on pyramid schemes, a warning sign is promoters emphasising recruiting new distributors as the real way to make money. A legitimate business earns from customers who want the product.

7. You must buy stock you cannot use or resell

The FTC warns about distributors buying more products than they want to use or can resell, often to stay in good standing or reach incentives. If your income depends on your own purchases, the customer is you.

8. No written proof, no references, no time to look

Under the FTC's Business Opportunity Rule, a seller must give you a one page disclosure document seven days before you sign or pay. If they make an earnings claim, they must give you a separate document headed "Earnings Claim Statement Required by Law", with the basis for the number. The disclosure must list at least 10 past buyers you can contact. A seller who will not put it in writing is telling you something.

9. A business sale dressed as a job

The FTC's guidance for sellers says not to tell people you are offering them a job if what you are really doing is selling them a business. A job pays you. If a "job" asks you to buy something first, it is a purchase.

10. A cheque arrives and you send money on, or you handle parcels

The FTC says no honest employer will send you a cheque to deposit and then tell you to send on part of the money. The cheque will bounce and you will owe the bank the full amount. It also says reshipping goods is never a real job. A related lure is a call out of the blue from a stranger offering work.

What do honest numbers look like?

A scam gives you a figure. An honest source gives you a range and says what it is made of. For a yardstick, here are ours. Across 370 researched ideas the median potential is $2,500 a month, and 272 of them (74%) are $3,000 or less. Only 46 (12%) are above $5,000. Those are our estimates of what an idea could make once running, worked out as a number of customers at one price. They are not what anyone has earned.

If an offer's income claim sits well above that, ask what it is built from, and who has actually reached it.

What is a checklist you can run in five minutes?

Run this on any offer before you pay or hand over details:

1. Does it want money before work? If so, stop.
2. Is the main product training or a kit? Ask who the paying customers are.
3. Does it promise big money for little effort, or say no experience and no risk? Treat both as warning signs.
4. Is anyone rushing you? Take a week.
5. Does income depend on recruiting or on buying stock? Walk away.
6. Can you see the earnings evidence in writing, and speak to ten past buyers? If not, assume there is none.
7. Did it find you, by call or message, out of the blue? Search for the company yourself.
8. Does a cheque arrive, or do you handle parcels? It is a scam.
9. Can you search the company's name with the word "complaints"? Do so before you commit.
10. Would you still do it if the income claim were halved? If not, you are buying the claim.

What should you do instead?

Start with something cheap enough to lose and slow enough to test. Our data says most ideas cost under $500 and take about a month to a first dollar. See what 370 online business ideas cost and take and how long it takes to make money online for the timelines by model. Choose a business where a paying customer, not a student or a recruit, is the source of the money.

If you want a starting point, the 60 second quiz matches the board to your budget, hours and skills. If you think you have already been caught out, check your own country's consumer protection agency for how to report it.