Spotting a Financial Scam

Financial scams are always with us but spotting them only takes a bit of diligence.
Be on your guard for fraudsters, shysters, swindlers con-artists and scammers.

First Lessons Spotting a Financial Scam

• Money does not grow on trees. If you have earned it get honest value in return.
• The tooth fairy doesn’t exist. If it sounds too good to be true it will be too good to be true.
• There is no such thing as a free lunch. Somehow a punter somewhere always pays.
• Shysters of all sorts make their living by cheating folk out of their cash.

Spotting a Financial Scam

• New scams crop up everyday so be vigilant
• If you are contacted without request, be concerned. Email frauds, lottery prizes, pressurised telephone sales, even door to door sales are unlikely to be to your advantage.
• keep up your guard and be cynical when it looks like something for nothing
• Beware of the straw-man who uses a PO Box number, has no web site or seems to lack credibility and substance.
• Look out when someone asks you to send money up front or provide bank details to receive the big prize.
• Do not ring expensive premium rate telephone numbers.

Financial Scams to Avoid

• Anything promising unrealistic returns on an investment and claiming it is perfectly safe. It will not be safe.
• Offers of a chance to join an investment scheme that will make huge amounts of money or make money very quickly.
• Investment tips where the scammer has a vested interest
• Upfront fees to get jobs working from home, invoices for none existent fines, chain letters asking for a small donation and keeping the chain going, phoney lottery wins and the list goes on. Look the gift horse in the mouth!

Tricks of the Financial Scammers

• Rushing you into a quick decision and implying you will lose unless you invest now.
• Making false claims, over egging the pudding and generally going over the top in the sales phase.
• Catching the unwary at an emotional time.
• Being so persuasive you buy something in hope or expectation of a bigger benefit which you never get.
• Pyramid selling schemes sell the right to sell the right. You pay to be able to sell say cleaning chemicals for £10,000 and can then sell to others the right for them to sell cleaning chemicals (with commission back up the chain).

Unscrupulous Financial Adviser Scams

• They suggest liquidating all or a substantial part of your assets and putting the proceeds into a single product (on which they get hidden commission).
• Do not take a deal that offers them a share of any increase in investments.
• An independent financial adviser should not push a single type of investment but should exploring your needs and all the appropriate market offerings.
• Asking for you to make a loan or do a deal with them personally
• Ask for payment in advance for their services or to make a cheque out to them rather than their employer.