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
{ 1 trackback }