The previous post on scams looked at some of the cons that are perpetrated by unscrupulous people in the modern world. This week, we will conclude by discussing more schemes used to make us part with our money.
Pump and Dump Schemes
As with seminars, there is legitimate information to be received from forums and newsletters. Nevertheless, this legitimacy makes the job of the scammer easier as it gives them the means to mix bad apples with the existing good ones rather than creating a new basket. With anonymity being an integral component of the Internet, the helpful tipster could be a pump and dump schemer or a company insider hoping to push their agenda. Using aliases and Internet proxies, one person could use a single computer and post several messages from different names and IP addresses to push an unknown or thinly-traded stock and create interest in it.
Online newsletters could be used by companies to promote their stock. Touting a stock is legal as long as there is disclosure about who pays the writer. However, withholding this critical information or lying about it constitutes fraud. Some promoters may reveal insider tips such as upcoming products or soon-to-be signed contracts in newsletters that would not be available to other investors. In retrospect, it could turn out that the insider tips were part of a pump and dump operation. It is essential that such newsletter subscribers do their due diligence and investigate if the analyst is unbiased after all.
Due to the widespread use of computers and the Internet, software scams are a good money-making machine for fraudsters. Typically, these scams begin as a helpful pop-up “Your computer is infected. Please click here to scan your system” (or something similar). When clicked, the scanner may seek payment or, even better, say it is “scanning your system” for a few minutes, and then seek payment to clean your registry/system.
Some programs come with adware and malware that could compromise your computer’s security and serve as a botnet or simply let a hacker steal your personal information. From a user standpoint, some of the the best safeguards include not clicking on links from unknown sources (even if it is on Facebook), scanning and updating your computer regularly, and using only a trusted computer for online transactions.
Cold Calling Scams
Phone scams are still around even though the web has become the primary channel for scammers. These schemes could involve professionals offering unsolicited tips on hot stocks or business opportunities. Sometimes, these fraudsters play with emotions by phoning seniors as their grandchild who is stuck in a foreign land, while on a trip, and asking for monetary help. As incredible as this scam might seem (the first reaction would be to ask why the grandparent would not verify with their son/daughter about where the grandchild is or inquire about this “difficult” situation), people still fall for them.
Most, if not all, scams involve monetary loss and considerable effort and time have to be spent to return one’s life to normalcy. Evidently, the best way out is to avoid these scams by learning about them and protecting our identity. Information about where to report scams can be found here.
What actions have you taken to safeguard yourself and your dear ones from such frauds? Did you learn about a scam the hard way? Was it your gullibility, greed or both that facilitated the con or was the scammer simply too good at their job?
About the Author: Clark works in Saskatchewan and has been working to build his (DIY) investment portfolio, structured for an early retirement. He loves reading (and using the lessons learned) about personal finance, technology and minimalism. You can read his other articles here.