Use our UK Finance guide and learn by experience. We outline pitfalls so that you don't have to learn the hard way, as many of us often do.
Sound Advice
Avoiding Possible Online Scams
In this day and age, there is probably an internet scam for every person using the net. From free gadgets to free gambling…all free if you sign up for a special. Some of these scams are very trivial and don't have much appeal to the average Joe. However there are other scams which are much more thought out and fall into fully fledged financial fraud.
Almost daily, the media presents cases of people who've fallen prey to financial fraud. Unfortunately though, with entire companies dedicated to catching people out with fraud, for every scam that gets caught and shut down, another one opens up that is often more cunning and ingenious then its forerunner.
How much of a problem is internet fraud? Well cases are brought forward to the tune of over a billion pounds every year in the UK alone. And its showing no signs of slowing down. Telephone, email, postage mail, almost every form of communication is being used these days to further the reach of financial fraud. Although South Africa is catching up to the rest of the world in terms of telecoms and the internet, its not immune to such scams.
The most popular nowadays of financial fraud is lottery scams. “You're the winner! Collect your money”, a red banner will flash at you as you receive your emails. All that you have to do to receive your payout is make a small administration payout. You excitedly make the small payment and you won't hear from the company again.
“The prize will be mailed to you!”, is another favourite. You'll be shown a glam list of fantastic prizes that you are eligible for. All you have to do (see the catch?) is pay a small admin amount that will cover the postage. Alternatively, many South Africans were caught by the scam that promised a prize that was described as a “limited edition Australian artwork of philatelic value.” This artwork? An Australian postage stamp – for which you had to pay R60.
This kind of email scam or financial fraud is most popular. So many people get caught every month. However there are other kinds of scams that are rising in popularity and that have an increased risk and danger.
In Canada, you might see an add in the local newspaper saying that you can acquire a cash loan, regardless of your credit history. Previously blacklisted people will jump at the opportunity because all that's involved is a small start up fee. Of course there is no loan, and your start-up fee is never seen again.
It seems then, that the smarter people get, the more ingenious the scamsters get. They seem to be always one step ahead, offering you something that just has to be real.
Unfortunately, the most gullible, or the easiest targets for such fraudsters are the elderly. A Canadian anti-fraud organization found that many scam telephone marketers are fond of the elderly because they are more trusting…even to complete strangers. These elderly ones are easy pickings for these clever conmen as they are often at home alone, they don't have financial prowess, and they're easily trusting.
Lottery scams are being done even telephonically nowadays. The name of a well known lottery is used which adds to its apparent sincerity and you're called and asked to enter…which you do. A few days or weeks later you called on by an excited telemarketer telling you that you've won! Brilliant. All you need to do, is send off a small administration amount before you can claim. Later you'll learn that there was no such lottery win and your administration amount is long gone.
Investment scams are usually also run on a telephonic system. You'll receive an unsolicited call, offering you the limited chance to invest in a rare asset or commodity. Most often, the investment will be in something that you cannot verify the existence of. Like a priceless gemstone in a vault in a Swiss bank.
Nigerians are world renowned for their mail fraud. They need to get a large sum of money out of the country and they want to use your back account. In return they'll leave behind a commission for you. You just need to give them your bank account details and they'll take care of the rest. Well they certainly take care of your bank account. They empty it out and you're left with nothing.
A scam that often seems quite plausible is a pyramid scheme of sorts. You'll get paid by introducing new members to a scheme. Those new members make their money by getting new members, and so it goes on. However its logical to think that somewhere down the line, someone's not going to get paid and often times, that person will end up being you. Online pyramid schemes are known as matrix schemes. You'll be promised a fancy gadget of sorts if you spend an amount on another item. However you'll only receive the gadget once a set number of other people have joined up and are registered with the scheme.
Unfortunately America has the highest rate of credit debt and conmen have used this to their advantage. They'll offer low interest loans to people with bad debt. All you have to do is pay an amount of money to cover the insurance and the loan is yours. But the loan never becomes yours and the amount you pay is lost.
Remember that there is no such thing as a low risk investment. Established companies will almost never ask you to pay for something upfront before receiving any confirmation of such payments.
Don't be silly with your hard earned money. Don't lose it to a conman who got the better of you. Remember that if something sounds too good to be true, it probably is.
