I love to discuss ways to save money, but I think it’s time to talk about not wasting it. Too many people get ripped off every year, by the same scams! I remember not too many years ago receiving letters that started out, “I am a lawyer, so I know this is legitimate,” or “A Nigerian investor needs to use your bank account,” or any other number of get rich quick type of schemes. For years these letters abounded in the mailboxes of America, tricking people, especially those who could least afford it, out of millions of dollars each year. Then with the advent of the Internet age, these same letters found their way into e-mail inboxes. At least in years past, these scammers had to pay for stamps to rip people off. Now they can sign up for a free email account and send their letters to millions.
Rule #1. “If it sounds too good to be true, it probably is.” Nobody is going to share their secret formula for making millions with no effort on your part for just $49.95. If it really worked, they wouldn’t need your $49.95. No investment can guarantee to pay 25% or more annually. The only guaranteed investments are those “backed by the full faith of the United States Government,” such as treasury securities and U.S. savings bonds.
Rule #2. “If you did not initiate the correspondence, don’t agree to pay anything.” In other words, if they called, wrote, e-mailed or came to you, then don’t go for it. Wait until you have done your own research and then you can go to them (“them” means a credible investment or sales professional). This applies to any solicitation for personal or credit card information. Remember, if the risks are low and the returns are high, something is not right. Basic laws of risk vs. reward say that the more you expect to earn, the more you could possibly lose.
Rule #3. “If you have to pay anything to claim your prize, you didn’t really win.” A woman got scammed recently by sending over $8,000 in “fees” to collect her “lottery winnings.” Legitimate sweepstakes and lotteries cannot collect money from your winnings. That’s what the IRS is for!
Rule #4. “If you make your money from new recruits, think twice before joining.” Multi-level marketing in this country is huge. In essence, insurance companies are multi-level, with commission overrides for regional managers, etc. Many other companies that encourage recruitment, such as Pampered Chef, are also legitimate because you are selling a product. You can still earn credits for your party sales, even if you never recruit another person. But some companies are all about the “recruitment effort.” In other words, you may have to pay a fee for every month you do not recruit, or you only make money from other people joining. If every purchase made by a customer is simply an entrance fee that allows them to sell more entrance fees, then this is most likely a pyramid scheme, where you not only lose money, but you may be part of something illegal (or at least unethical).
Rule #5. “If it comes from another country, leave it there.” So many scams come from other countries. Why do they do this? Because they can more easily skirt the laws or elude the authorities. Otherwise, someone in this country would be doing the marketing. I’m not talking about foreign stocks or bonds, but those “opportunities” mentioned earlier, such as the Nigerian bank.
These 5 basic rules should keep you safe and help you avoid any unscrupulous con artists and identity thieves now and in the future. If you are still unsure about something, go back to rule #1. And remember, if they “need a decision right away,” then your decision should be always be “No thanks.”