Are you a good candidate for a scam?
After pleading guilty to running a pyramid scheme that duped at least 150 of his close friends and relatives, disgraced financial advisor Earl Jones was recently sentenced to 11 years in prison.
Given the opportunity, would you have fallen for his scheme? How do otherwise intelligent people get duped this way?
Knowing a bit about investments, being impulsive, being impressed by authority and living on your own are just a few of the characteristics that help make people susceptible to ponzi schemes and other money-related scams.
Investment fraud victims are also more likely to be male, married, more educated, and have higher levels of income than non-victims, according to the NASD Investor Education Foundation.
Sound like anybody you know?
Those who have become fraud victims identify themselves as being willing to listen to sales pitches from those they do not know and are more willing to attend free seminars on investing.
In other words, they expose themselves to potential frauds more often than others do, NASD says.
They also tend to experience more negative life events (illness, loneliness, financial distress) than non-victims. The theory being that it's the stress of these events that makes them particularly vulnerable to aggressive sales pitches.
Investment fraud pitches use more psychological manipulation techniques in their sales pitches than other cons do. Just like magicians, accomplished hustlers and scam artists understand enough about how the mind works to exploit its vulnerabilities, says Frank Stajano, a security expert at Cambridge University.
Here’s his list of the seven psychological principles used in short cons to part people from their cash. If you find it all a bit dense, click here and here for some real-life street scams courtesy of the BCC television show The Real Hustle.
We like to think that only other people fall for such scams, but that’s clearly not the case. What’s your experience with those who’d like to pick your pocket?
By Gordon Powers, MSN Money
Posted by: Michael | Feb 19, 2022 8:34:31 AM
It could be GREED (love of money and making more easy money) that lead these people astray.
Either that, or they had that 'disposable' income to invest in 'something that sounds too good to be true' in the first place. They wouldn't get to me because I don't have that kind of money available for their use!
Posted by: Malcolm Mansfield | Feb 19, 2022 10:04:58 AM
Some friends were recently scamed in Ghana, West Africa. The scam is for the purchase of gold at well below market value. The idea is that you are purchasing directly from the mine at wholesale price. The scam price is usually around $18,000 to $21,000 per kilo of gold "dory bars". The bars are to be sent to a refinery of your choice for further refining. When they are refined and certified, you pay. Here's the catch, the scam artists ask for fees for "paper work" to get the gold to your destination. You pay the fees (around $100,000) the gold never arrives and you are out your money.
Posted by: Lynda | Feb 21, 2022 11:09:03 AM
It all comes down to Greed unfortunately. We can't take all that money with us when we die and we obviously have enough money to live comfortably if we are investing large amounts of money. I guess some people just don't have enough. We should be thankful for what we have.
Posted by: grannyone | Feb 21, 2022 2:42:44 PM
It is often not greed on the part of the victim, my friend fell for a scam, he only lost a few thousand but they preyed on his "smartness" and his "uniqueness". He was told over and over that only the best would be allowed to invest in this opportunity and he was really flattered by all the attention. These people were telling him he was the kind of guy he never thought he would be, a bill gates type of guy. When he tried to back off a few times they cut him cold, out of their friendship for a few days and he went running back. When all his money was gone they took off. He was looking forward to the extra money but it was mostly the comraderie of his fellow investors, the coffee meetings, the hotel ballroom social meetings/investor education that kept him hooked. He felt really truly important and loved for almost a year. The people who conned him treated him like he was somebody. He mentioned much later that it was almost like the beginning of a romantic courtship except that in courtships things mature and the initial eurphoria disipates but these people made it feel like a first time date all the time.
Posted by: Carol Petkau | Mar 12, 2022 10:30:22 AM
Our investment appearded as promised. An opportunity with exceptional dividend, for a year and a half.Then it stopped abruptly. Now the lawyer(we can no longer afford) is using words like ponzi, fraud? We don't know yet. Will we ever know for sure? Was it our agent Planned Legacies or their investment contact Righthedge Investment that is at fault? Or did Francois Marchaud with Righthedge just loose our investment and is afraid to tell Planned Legacies? Will the truth filter down to us? Why can't we get any help from Alberta Securities? What is their mandate? An international forensic accountant is costly.
We are feeling like a double victim with no place to turn.
Posted by: Allen Wright | May 14, 2021 4:20:25 PM
"The fool and his money are often parted". Morale of the story. Don't be the fool. Keep your money. Invest wisely. If it's remotely too good to be true then it probably is. Con artists like to target people by being friendly and pressure them, or often ask for help, or tell you a story about how good they used to be. Now they are down on their luck and need your help. If anyone asks you to partner with them on something, or to invest your money then ask yourself- "What happens if it's a scam?" Who is to benefit and why does he really need you? Why can't he do it himself? Scammers live a life to rip other victims off and have eyes that are cold and smooth tongues that are like serpents that slither with each word. They can joke about things with a straight face and tell fabulous tales of how good they are. They tell you tales and sell you the dream. Then disappear with your hard earned cash. They play you like a fool. Don't trust others with your money. Do your own investing. Buy something in your name. A condo for example and rent it out. Don't place your money in stocks and funds that get raped by the corporate entities because the pool only shrinks. It's like hockey cards. Only worth what the next person is willing to pay. Often gets manipulated and the average joe just loses his wealth over the years. Trust in your own decisions and use your gut instincts. The one that say's "woah watch out". People say there is greed and fear that drives us. But I think it's just two fears.
1) Fear of losing out on the opportunity.
2) Fear of losing the actual money.
It's ok to pass on number one. Let number two guide you one number 1.
It's better to be wise than to be the fool.