Con artists are continuously working on new scam schemes to cheat consumers of their hard earned money. Despite the large amount of information available regarding scams, we continue to see a growth in consumer fraud and new scam schemes continue to emerge. Understanding some of the most common types of scams can help consumers be more alert and therefore less susceptible to becoming victims. David Krueger discusses some of the most common types of scams in his book The Secret Language of Money.
Soft scams are hard to detect and often go unnoticed until it’s too late. These types of scams misrepresent genuine products or companies. In these scams the product or company actually exists, but the con artist misrepresents certain aspects of it to make it more attractive then it really is.
Unlike soft scams, hard scams involve nonexistent companies and products. In these types of scams the con artist makes up a product or company and recruits potential investors who in turn recruit others. Often these sound like legitimate business ventures and may seem very attractive.
Bad Investment Scams
Bad investment scams involve actual products and companies with extremely high risk. Often investors are assured by the con artist of high returns and no or little risk, which should signal a red flag to potential investors. Always remember with high return comes high risk. Some more on investment scams.
Affinity scams involve scams that prey upon members of identifiable groups such as ethnic groups, religious groups or professional groups. The con artist who promotes the affinity scam often either belongs to the similar group or pretends to belong to the group.
Identity Theft Scams
Identity theft is one of the fastest growing white-collar crimes in North America. There are many places and many ways one can steal someone else’s ID, stolen ID can be used for variety of things. It can be used to purchase things online, commit crime in someone else’s name, commit tax fraud, and so on. Some tips to protect yourself.
A whole article can be dedicated to Internet scams. With the rapid growth of the Internet we have seen a rapid growth in Internet scams, these range from hacking into your computer and stealing your personal information to fraudulent loan offers and fake websites. Do not download any programs from un-trusted sources, do not open emails from unknown senders and never provide personal information over the Internet.
Pyramid scheme and Ponzi scheme’s have recently received a lot of press attention mainly due to Bernard Madoff’s investment fraud. These types of scams rely on continuous recruitment of new investors. Basically you pay a fee (say $1000) to join and for every new member you recruit you receive a fee (say $200), the plan works well until there are no more new members to join.
Have you ever, or do you know of anyone who has fallen victim to any of these scams? What other types of scams do you know of? Share your tips and tricks
Subscribe to Financial Highway
Like what you just read and want to get more great content from Financial Highway? Doing so is easy, just enter your email address below and you'll automatically get Financial Highway posts sent straight to your inbox. Spam? I hear ya, but don't worry, Financial Highway will never spam you or share your email address with anyone. Oh and you can unsubscribe at any time with one simple click.