FIVE common scams of our time you should know, and how to avoid them

FIVE common scams of our time you should know, and how to avoid them

Scamming is old as man himself. People have been scamming each other since the beginning of humankind. No matter how hard we try to prevent ourselves from being indulged in scamming, people will still forge new ways to get hold of your hard-earned money or property.

With the rampant development of communication technology and the rise of social media, the likeliness for people to find themselves trapped in a scam is higher. Thus, it becomes crucial for an individual to be aware of some most common types of scamming and learn how to avoid them.

The “Nigerian Prince” letter aka “419” fraud

This is a rather complicated (not to mention famous) variation on the advance fee scheme. 

An anonymous scammer will contact a person, promising them a share of millions of dollars that, for numerous complicated-sounding reasons, the scammer cannot currently access.

They ask for money to help them transfer the funds, often through illegal means. None of what the scammer is saying is true.

It’s called the “Nigerian Letter” scam because the most infamous version of this scheme involved a so-called “Nigerian prince” offering people millions of dollars to help him transfer his riches out of Nigeria.

The fun part of these schemes is when people stop paying, but the scammer can still use the financial information they have forwarded to spend the victim’s money and steal their identity.

The way to protect yourself from this scam is pretty simple: If you receive an email or a letter from someone claiming untold riches, if only you can help them out with some money up-front, delete that email immediately and report the scammer to the authorities for further actions.

Advance-fee scam

If someone comes to you with a financial or business proposition that requires you to pay them upfront, they are probably running an “advance fee” scam.

These con artists come around with a beautiful opportunity for you to “triple your money” or “get in on the ground floor.”

They ask to be paid upfront for their services—they might refer to it as their “finder’s fee.” 

Then once they have been paid, the money or business opportunity they were talking about never materializes. Meanwhile, they fade into the background.

To protect yourself against this scam, remember to always do your research into someone before paying them for services not yet rendered. 

Watch out for P.O. boxes and non-disclosure agreements. Anything that might suggest this person’s business is a fly-by-night operation that runs on secrecy. 

And lastly: If what they promise sounds too good to be true, it probably is!

Identify theft

These scams have become increasingly common as more and more of our lives (and our sensitive personal information) move online. 

It used to be a person who had to go through your trash to steal your identity. Nowadays, they’re just as likely to get it by sending you a “phishing” email that gives them access to your laptop.

When someone steals your identity, they can use your personal information to take out loans and credit cards, make purchases online, and even commit crimes.

The only thing worse than having a bunch of debts in your name that you’re suddenly responsible for is having the police show up and arrest you for a crime you didn’t commit!

To protect yourself from identity theft, make sure you always shred your sensitive mail and documents, don’t give out your credit card number over the phone unless you made the call, regularly check your bank and credit card statements, and order a free copy of your credit report to review at least once a year.

Online vehicle sell scam

If you’re buying a used car online and you answer a classified ad, there is always a chance that you’re being set up.

Con artists love to post pictures of vehicles they do not own and claim that the car is for sale at a ridiculously discounted price. 

There will often be a manufactured sense of urgency to the transaction; the scammer has to sell the car immediately because they are moving or being called up by the military. 

It was a car they received in a divorce settlement or from a deceased relative.

These scammers will usually try to fake a relationship with a reputable online company and might even provide you with fake toll-free phone numbers to call and “verify” the transaction.

But instead of having you send cash, they’ll ask you to buy a bunch of prepaid gift cards and then share the codes with them. Once you’ve done that, they vanish.

Yet again, this is a scam that copious amounts of research can foil. Don’t just look into the seller. Look into the car itself. Get its VIN or license plate number and look them up to confirm ownership. 

This piece of advice holds across every type of scheme: If the person you are communicating with asks to be paid in the codes from prepaid gift cards, stop. They are 100 per cent scamming you.

Ponzi Scheme

Ponzi schemes will always be presented as an investment opportunity. You put your money into X business venture, and you will get a guaranteed return. 

 “opportunities” will usually be presented as somehow exclusive, the kinds of things that “regular” investors can’t get in on. 

Ponzi schemes are different from most scams in that early investors will receive returns on their money! And, of course, they’ll be so pleased with the results that they will invest that money right back into the fund.

In truth, those returns that they’re receiving are a lie. Their money isn’t being invested at all. Instead, the scammer is taking money from new investors and is using that money to pay back their original investors. 

Eventually, the new money dries up, at which point the entire scheme collapses. The scheme is named after its creator, Charles Ponzi. 

Still, the most famous Ponzi scheme was perpetrated by New York financier Bernie Madoff, whose $64 billion scams came undone during the 2008 financial crisis.

Be extremely wary of anyone promising guaranteed or outlandish returns on your money. And always consult a third-party financial professional before saying yes to any opportunities.