Demystifying mystery shoppers

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See that woman in front of you at the fast-food joint ordering 10 different kids’ meals? She could be a spy. Ditto the guy returning 50 pounds of dog food to the pet supplies outlet on the busiest day of the week.

They’re mystery shoppers, also called secret shoppers. For a fee, they will test the customer service at local retailers, restaurants and other service-oriented businesses. And while getting paid to shop sounds like a dream come true for some, there’s a lot more to it than running up someone else’s credit card or enjoying a three-course lunch for free.

“People who do mystery shopping work for it,” says John Swinburn, executive director of the Mystery Shopping Providers Association, a trade group for companies that hire shoppers. “People who promise big rewards are painting an unrealistic picture. It’s very rare that a mystery shopper makes a living as a mystery shopper.”

Still, mystery shopping has a certain allure. And if you work the system properly, you can make some extra money on your own terms by wandering the aisles of your favorite stores.

There’s no such thing as a typical mystery shopper. While the assignments are popular with stay-at-home parents and retirees, they also attract college students and executives who are between jobs or changing careers.

“It runs the gamut,” says Anne M. Obarski, executive director and founder of Merchandise Concepts, which hires shoppers for clients.

Businesses usually have some very specific questions or instructions for the shopper. “You can’t just go and observe and decide, ‘This is what I like, this is what I don’t like,'” says Swinburn. “It’s very objective.”

For the typical shopper, pay ranges between comped meals to $25 to $50 for more complicated assignments. A job involving a more intricate script, a longer written report or some technical expertise could get you several hundred dollars.

Typically, shoppers don’t work directly for the business they are evaluating. They usually are hired by third-party market research or similar firms on behalf of the client.

Your location is also a factor. There are more assignments in large urban and suburban areas, but there are also more shoppers to fill those jobs, says Swinburn.

Mystery shopping ups and downs

Like anything else, mystery shopping has its ups and downs. One positive: You can set your own schedule. “What’s great about this is that you can work as much as you want or as little as you want,” says Ilisha Newhouse, author of “Mystery Shopping Made Simple.”

And the hours are flexible, for the most part. You might spend a day shopping and that evening or the next day writing reports for clients. “It’s not necessarily an 8-to-5 thing,” she says.

But the work is often sporadic, meaning you probably can’t make a steady living at it. You can, however, pick up a little extra money to supplement your income. Just be sure it’s an assignment you want.

Newhouse loves to read, so she thought she’d landed a dream assignment when a company asked her to shop a bookstore. But when she learned the target business was an adult bookstore, she declined.

In this case, the job violated Newhouse’s personal code. Some other reasons to turn down an assignment: It’s too far away, it’s in a lousy neighborhood, the pay is too low, or you don’t have sufficient knowledge about the product or service to be credible.

Finding work

So are you ready to hit the stores? Before you sign up, remember the cardinal rule of mystery shopping: You never pay for the opportunity to shop. Ever.

Many people or companies promise to sell shopper-wannabes lists of opportunities or companies that are hiring mystery shoppers. “What you do is pay $40 for a list that is basically on the Internet for free,” says Newhouse.

Instead, start with these Web sites:

  • The Blue Book, the membership directory of the Marketing Research Association, has a searchable database of members who use mystery or secret shoppers. It’s free, but registration is required.
  • The National Center for Professional Mystery Shoppers & Merchandisers keeps an online alphabetical list of companies that use mystery shoppers. The free site also hosts various forums where companies post job openings.
  • The Mystery Shopping Providers Association site allows you to search for jobs by location or business type. You also can look up hiring companies by name. It’s free.

Do you have some dream companies you’d like to secret shop? Call their corporate headquarters, ask for the marketing department and find out who they hire when they need secret shoppers, says Gary Foreman, publisher of The Dollar Stretcher. Then contact that company and get on its list.

A numbers game

If you want to mystery shop regularly, remember it’s a numbers game. Each company will only have so many assignments, so if you want to work often, you need to sign up with a lot of different companies.

Newhouse’s rule of thumb: Apply for 10 a day for 30 days; your phone and email will be flooded. After that, she says, gauge your schedule and adjust your applications accordingly.

Swinburn recommends starting with companies in your geographic area, then contacting ones in other parts of the country.

“Signing up with 12 companies doesn’t guarantee you will get a [shopping assignment] today, tomorrow or next week,” Swinburn says. So he advises you to be persistent and sign up with as many services as you can comfortably handle.

While some professional shoppers groups offer certification or training, you don’t need it to start shopping. But companies might ask for some basic demographic information so that they can match you to assignments. (That’s yet another reason to do some checking on the company to make sure it’s legit.) Never give more information than you’re comfortable with. No matter how great the company, it’s not the only game in town.

When you’re offered a job, make sure you’re getting something out of it. In the beginning you may opt to take a couple of lower-paying assignments to establish yourself, but you don’t want to be pigeonholed for low-wage work.

Some of Newhouse’s litmus tests: Is the assignment nearby? Is it somewhere I’d be going anyway? Is the pay worth my time?

Understand the shopping rules

When you do take a job, make sure you understand exactly what you’re supposed to do, what questions you need to answer for the company, how to fill out the report and how much and when you’ll be paid.

The typical lag time between doing the job and getting paid is 60 days, says Newhouse, but a lot of new shoppers don’t understand that. “We get a lot of first-time shoppers who haven’t read their contracts,” she says. “They go on public message boards and start bashing these companies. It’s career suicide.”

Also be vigilant about guarding your personal financial information. Reputable firms will pay you by check, so they don’t need your account numbers. The company might, however, need some tax information, such as your Social Security number.

If that makes you uncomfortable, Newhouse recommends contacting the Internal Revenue Service and applying for an employee identification number (EIN). That way, you keep your Social Security number between yourself and Uncle Sam, and also protect the company’s tax reporting needs by providing the EIN. At tax-filing time, when you file your Form 1040 with your personal Social Security number, you’ll also file a Schedule C or C-EZ — complete with your EIN — to report your mystery shopping income.

Speaking of taxes, since you’re on your own, keep all your check stubs so that you can compare them to any tax forms (usually 1099s) you’ll get from the various companies that hire you as a mystery shopper. You also might need to file estimated taxes.

And keep abreast of policies and laws regarding mystery shoppers. For instance, it’s illegal to mystery shop in Nevada, says Newhouse, unless you have a private investigator’s license. Make sure you keep up with what’s going on in your state.

Dana Dratch is a freelance writer based in Atlanta.

Written by
Dana Dratch
Personal Finance Writer
Dana Dratch is a personal finance and lifestyle writer who enjoys talking all things money and credit. With a degree in English and writing, she likes asking the questions everyone would ask if they could and sharing the answers — along with smart money management tips from the experts.