As a close to the series on how to prevent and report scams I thought it would be a good idea to run a poll and see how many  of you have actually been scammed before.

Share your input have you ever been hit by a scam?  If you have let us know by contributing to are poll.  You may have been hit by more than one scam sot you can pick at up to two options.

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In the last article in this series we talked about some of the red flags you should what out for so you don’t fall prey to a scam.  In this post I will be diving into some of the types of scams that are out there. 

Investment Scams

These type of scams come in all shape and sizes but here’s the gist of it all.  Investment scams will ask you to invest a certain sum of money and in return guaranteeing you a certain return on your investment.

For example, if someone tells you that by buying a certain stock you will be guaranteed at least a 20% return based on the inside information we have on this company.

Now the offer may sound attractive but first off their are no guarantees when it comes to the investment world, especially in the stock market.  The other thing  is that if someone is proclaiming they have inside information on this stock it is illegal to possess such information, but even if they don’t really have the information this is definitely the works of scam.

Here are a couple a tools you can use to detect if an investment is actually a scam.  The first is the Risk Meter.   The Risk Meter is a simple questionnaire that ask you 12 different questions about you and the investment situation you are looking at.  After answering the questions the risk meter will determine the level of risk you are making by investing your money.

The Second is the Scam Meter.  The scam meter does the same as the risk meter but instead will ask 4 questions about the investment which will ask you to describe the investment and the scam meter will let you know if it is a scam or not. 

Internet Scams

If you have the Internet you know how many people out their are proclaiming they can make you million in a matter of weeks.  These scammers will say almost anything to get you to buy into their deal. 

However, like the saying goes, if you it sounds to good to be true then it probably is.  The bad part about this is that people fall for these everyday. 

However with these types of scams their are no tools available to tell you whether a deal on the Internet is really a scam or not. The best thing you can do here is to do your research on what you are buying on the Internet.  Usually just doing a search on google will be a good indicator.  

So just type in the product you are looking at into the Internet and put the word ‘scam’ behind the term and see what comes up.  However don’t just use this as your only indicator, as in the Milton Hayward Scam their was no info on the Internet. 

Telemarketing Scams

Have you ever gotten that  call before were the person on the other end was just trying to sell you something.  I know the feeling.  I’ve been duped with telemarketing scams before.  The worst part is you don’t know if the person on the other side is legit or not.

One evening I got one of those such calls and ended up paying the guy $500 to sell my timeshare for me.  He told me they usually had them sold in 2 months and that I would get all kinds of offers and believe me his story was very convincing.  Well 2 months went by and no offers, no calls, and no money.  In fact I even called the company back and all I got was an answering machine.  In plain words I got ripped off.

In this situation my advice is if I’m not looking for what they are selling and I can’t see them in person I’m not interested.  In others words don’t buy over the phone unless you called the company yourself and you will save yourself a lot of headaches.  Trust me.

Pyramid Scams

I usually don’t see a lot of these scams anymore but here is how it works.  Usually their is a guy at the top who gets you to invest money with their company.  They claim you will get your money back plus interest  in a specific amount of time. 

But it doesn’t stop their.  They will ask you to recruit a few friends and if they invest their money as well you will make even more money because you are a tier above them.  The bad thing about this scam is the guy at the bottom get nothing if the scam goes bust.

When a scam like this was going on in my area a farmer sold his whole farm to invest in what he thought was a legitimate investment.  He ended up losing everything to say the least. 

So in this situation here is what you should look for.  If someone comes to you and is asking you to invest money with them and is guaranteeing a specific return on investment  and recruit a few of your friend while your at it.   This is a prime example of a pyramid scam.

Share Your Story

The worst part about all of these scams is that the scammer is not usually doing just one of these scams.  They may be operating a pyramid scam on the Internet or running an investment scam over the phone.  The point is all scams come in all different shapes and sizes to the small time beginners to the big time criminals.

If you’ve been involved in one of these types of scams feel free to share your story and what you have learned from it. 

Chris

In my last article I talked about a lady name Laura who was scammed out of a lot of money by an supposed investment company based out of Hong Kong.  In this post I want to show you what to look for so you won’t become a victim of these scams.

Do You Know When You Are Falling For A Scam

About 10 years ago, I was invited to meeting by a few friends who said, ‘You gotta see this.’  So after hearing them brag about this meeting, I have to admit I was a bit intrigued to see what all the fuss was about. 

While we were on the way, I asked them what this meeting was all about.  They told me it was all about investing some money with a company called Purchase Plus. 

So at this meeting I learned about an investment plan where you give your money to this company, Purchase Plus, and within two months they would send you a check back for the full amount plus a guaranteed extra amount.

Now at this point you might be thinking this is a total scam but when you’ve never been exposed to something like this you don’t know any better.  As a result of going to this meeting I was asked if I wanted to invest money with them as my friends did. I almost agreed but I instead decided to wait and see what happened.

A few months later, a headline came across the news that said that the Purchase Plus Pyramid Scam had been foiled.  My first reaction was shock.  I didn’t even realize I was being scammed.  Purchase Plus had scammed millions of dollars out of people before finally being caught.

As for my friends that bought into the scam, they got their money back but I have heard of a few who lost a lot.  The bad part about this whole situation is that I didn’t even know I was being scammed, and that’s the worst part–you may not know you have fallen for a scam before it’s too late.

So the question needs to be asked, how do you know when you’re being scammed?  Here are a few points to consider.

5 Red Flags To Watch Out For

• Guarantees. If they are guaranteeing you something like big money, that should instantly raise some red flags. Especially if it’s an investment for money. When it comes to investing money in the stock market there are no guarantees.
• Your must act now. This is just a gimmick to get you to do something in the heat of the moment especially when your emotions are high so it doesn’t give you a chance to think about it. Remember you all have time to think about it.
• You’ve won a free gift. If you get this line, run in the other direction. They may say you get something free but you have to pay postage and handling, and as a result you will be enrolled into a membership program that will cost you money every month. I’ve fallen for this before and it was next to impossible to cancel the program.
• Pushy sales people from unfamiliar companies. If you get some guy calling you on the phone trying to push you into buying something that you don’t want just hang up. Pushy sales people tend to get you all emotional so your logical thinking is out of the picture, making it easier for them to get you to buy. If you have never heard of the company, this should also be a red flag.
• If they ask for your information over the phone. Sure if your buying something from a reputable company over the phone it’s not a scam but ifsomeone callsyou proclaiming you’vewon a free gift but they need to confirm your identity withyour credit card number or social security number it’s a scam.

Do You Know Of Any Other Red Flags To Watch Out For

Now this isn’t all of the warning signs but these are some of the big ones.  If you have some other warning signs to watch out for leave a comment below.  Also feel free to share your story of any scams you have witnessed or been involved with.

Chris

This post was recently featured on The Carnival of Personal Finance by  The Mighty Bargain Hunter.

This week is a very special week.  This week is all about dealing with scams and how to prevent them.  Throughout the week I will be presenting a series of post talking about how to prevent being scammed, the types of scams, most important how to report scams.

Why I’m Doing A Series

First off, I wanted to do more than just a post.  To many people are working to hard to get out of debt and save up money only to be scams out of their precious dollars.

Secondly, I felt that just putting out one post wouldn’t do the topic justice.  I also realized after I started to write the post I had so much to talk about I could have easily made that post a 3000 word article.

Finally, I wanted to chunk things down to a few smaller articles so it would be easier for you for you to digest and read.  Thoughout the week I will also be linking all the post back to this article so you will be able to access each article from one location.

The Article Series

5 Red Flags To Look For So You Don’t Get Scammed

4 Common Types Of Scams That Could Hook You When You Least Expect

5 Ways To Report Scams

Poll: Have You Ever Been Hit By A Scam

Chris