Statistics have shown that one in 18 Americans falls prey to scams or financial fraud each year. This does not include senior citizens who get abused financially by family or friends, of which an estimated 5.4 % of senior adults have experienced getting scammed according to the American Journal of Public Health.
The most popular of these are get-rich quick investment schemes, investment opportunities promising dividend payouts and identity theft.
These scams were orchestrated by those in a position of authority and trust or by con artists with very persuasive capabilities. Others are captivated by the promise of financial wellness benefits and hope to find a way out of their financial difficulties. But surely, one can avoid falling victim to these scams and protect your hard-earned money from getting stolen.
“Guaranteed” fast return
There’s no such thing as a very rapid return on investment. There are way too many factors involved in the dynamics of business and investments to let you earn a sustainable return on investments in less than a week, a month or even a year.
The Financial Industry Regulatory Authority (FINRA) suggests that once you get to determine the red flags of such fraudulent activities, make sure to steer clear right away.
There are three common signals that could help you identify a scam. A risk-free guarantee to increase or double your money in a short period of time, overly consistent investment returns despite volatile market conditions and complex investment strategies without documentation or any product attached to it.
Trust me, we’re best buddies
Trust is one of the biggest virtues used by con artists and scammers to win people to buy into their schemes.
Statistically, the second most reported scam is affinity fraud associated with religion, race or organization. Be it a fellow churchgoer, club member or social network unless there are valid or quantifiable reasons to show proof of a business or investment offer just refuse it.
Unclear investment methodology
Literally, this is just like pulling a bunny out of a hat. When people start approaching you for a venture promising to give you stellar returns but could not provide a clear picture of how it is operated or what business model it hinges on, then it’s time to stay away.
A vague profile or business process is a red flag that you should look out for.
No tangible product to sell or offer
Many people are just a stickler for shortcuts, which is a hotbed for scammers. People are still convinced about pyramiding and networking ventures, but while some do have its rewards. The last thing that you should stay away from would venture that bank only on networked recruitment.
It is really important to establish a business either offers a service or product otherwise you are just falling into a trap.
So the next time someone approaches you with a remarkable offer, think on these four things so that you do not fall into the fraud trap.