Don’t Fall for Ads Promising Huge Discounts on Premium Goods

If you use Facebook or Instagram, you’ve probably already seen an ad, shared by someone you know, promising 80-90% off on things like Ray-Ban sunglasses, Nike shoes, Apple devices, or some other premium brand.

And I get it. Who wouldn’t want a pair of Wayfarers for $25? Looking like you might be friends with rock musicians, for an eighth of the cost? What’s there to lose?

Unfortunately, there can be a lot to lose, and somewhere between “nothing” and “a goofy-looking pair of counterfeit Ray-Bans” to gain, because these ads will lead you to nothing but scams, ripoffs, or even worse.

The best-case scenario is receiving fake goods, as long as they don’t use the banking information you gave them to keep making additional charges. You still can’t actually wear that stupid pair of plastic sneakers in two different sizes with the upside-down logo, but at least you’re only out $20 or so.

However, many of these websites are loaded with malware that can infect your computer or mobile device, or they will try to harvest your social network credentials to take over your account and further circulate their scams. Others may simply take your credit or debit card credentials and make fraudulent charges without sending you anything.

This would normally be where I remind you that it’s a good idea to always use a credit card instead of debit when shopping online, but in the case of these “90% Off Nike Jordans!”-type schemes, don’t even let it get that far. Those ads are some kind of scam, 100% of the time. Don’t even consider clicking.

If you did click, it’s time to run a virus scan. If you made a purchase, it’s time to have that card deactivated and get a new one as soon as possible.

Don’t Let Down Your Guard against Identity Theft

It’s just human nature: you hear about the same negative thing often enough for long enough, you’ll start to become a little numb to it. You may even check out entirely. And identity theft certainly crossed over into “Things We’re Tired of Hearing About” territory quite some time ago.

However, that doesn’t mean it has gone away. Identity theft is still happening to millions of people every year, and if anything, the thieves are becoming more sophisticated.

Some of the best ways to protect yourself have been written about thousands of times. Use a crosscut shredder to destroy documents containing personal information. Don’t click on links in an unexpected email, and completely ignore any email that says “click here to re-activate your card.” Use strong passwords, and never reuse them across different sites. Freeze your credit, then temporarily lift the freezes any time you need to apply for a loan or a credit card.

There are also some ways to protect yourself that don’t get as much attention (yet). If an account gives you the option of using Two-Factor Authentication, take that option. Beware of unfamiliar phone numbers that share the first six digits of your phone number. If a financial account allows you to set up alerts via text message or email, do it.

In any case, don’t become desensitized to information about identity theft just because you’ve heard about it a million times before. There might be a new threat, or a new twist on an old threat, or a reminder about a good habit you’ve let slip. And even if it is old news to you, remember that nobody is ever 100% safe from identity crime. Keep that in the back of your mind during any interaction where personal information is involved.

Earning money online: if they say it’s easy, it’s a scam

Even in 2019, the dream of lounging on a beach somewhere and sipping umbrella drinks while a large, steady income rolls in from an online business still lives on in the popular imagination.

And it’s true: there are a few people who have built online businesses that rake in huge amounts of cash and allow them to live pretty much anywhere they choose, travel when and where they want, and buy nearly anything they want as soon as the notion hits them.

But there’s a difference between what those folks did and what you might find if you just searched “how to make money online” and went with whatever popped up: they put an absolutely massive amount of work into their businesses from the beginning, they continue to do so, and if there’s one word that does not apply to anything about their path to success, it’s “easy.”

In fact, in every case it was way more difficult than getting a traditional job working for someone else. Longer hours, higher stress levels, near-zero income in the beginning, and at some point, the question of leaving a stable job for a much riskier venture that may or may not pay off someday.

This is not to say it can’t be done. But if you’re looking for ideas to start an online business or earn extra side income, ignore anything that someone else created that claims it will be “easy” or “fast” or “guaranteed,” especially if you have to buy your way into it. A lot of multi-level marketing and pyramid schemes operate on these promises.

If you’re interested in going the digital entrepreneur route, you’re going to have to create something from the ground up. You can use other people’s platforms (for selling e-books or running an online store, for example), but the actual thing you’re selling? You’re probably going to have to create that yourself. That’s where the massive amounts of time, energy and resourcefulness come in.

A Healthy Dose of Skepticism for 2019

2019 is going to be a lot like 2018, and a lot like every other year in recent memory: there will be a couple new ways to become a victim of some form of scam or fraud, there will be a boatload of old, tried-and-true scams still making the rounds (some with slight variations that make them seem new), a few “latest threats” frantically shared on social networks that turn out to be hoaxes, at least one or two major data breaches (and dozens of minor ones), and a whole lot of information, both accurate and inaccurate, about all of it.

And so, as we approach the new year, my advice is to stick to one basic principle, and to always ask yourself, “Is this the way the world really works?” That little bit of skepticism can be your best friend when it comes to avoiding scams and rip-offs, as well as not being the person who spreads false information and hoaxes online.

A lot of people make health-related resolutions this time of year. But before you spend money on a dietary supplement being hawked by some A-list celebrity, ask yourself how you think that A-lister got into the shape he or she is in. Does it seem more likely that they took a pill (that’s only been on the market for a few months, mind you), or could it be the full-time nutritionist on staff, the live-in chef, the million-dollar in-home suite of workout gear, the live-in personal trainer and the fact that their entire job description, when not actively working on a project, is to stay looking as perfect as possible?

When you read a story breathlessly shared on Facebook about robbers using fake perfume samples to subdue victims in parking lots (an urban legend that’s been repeated in various forms since around 1999), take a moment to notice how unlikely the whole scenario seems in light of how quickly most criminals prefer to operate (to say nothing of how ether and chloroform actually work). Notice how many of the “I narrowly escaped this!” stories boil down to, “I saw a man in a parking lot, and then nothing happened.”

When you get an email telling you that you’ve won the Powerball Lottery, remember how lotteries actually work in the real world. You buy a ticket and wait for some ping pong balls to pop out of a big tumbler. You don’t just “have an email address and wait until you win.”

When the phone rings and the caller claims that he’s from the IRS, you didn’t pay your taxes, and that you’re going to be arrested today unless you pay up immediately by purchasing some iTunes cards at the drugstore and calling back with the information, ask yourself if any one part of the situation squares with how the IRS actually functions. (Hint: none of it).

You don’t have to become a cynic, but just remembering to think about a new claim or information before you act on it can be a powerful ally. And remember this: if someone is trying to make you afraid of some immediate (or even abstract) threat, and they tell you the only way to make the fear go away is to give them something (money, personal information, etc.), they are probably not telling the truth.

Avoiding Charity Scams

I sometimes repeat myself, and occasionally I’ll say something I’ve said before, too. But even if you’ve read or heard about charity scams before, it never hurts to have a quick reminder. It’s already November, and charitable giving comes up a lot this time of year.

I’ll keep it short: decide in advance which charitable organizations you wish to support instead of waiting for others to approach you. If you’re looking for a new cause, research before you donate.

When you already know whom you’re giving to, it makes it much easier to turn down those who call or email out of the blue because you won’t feel pressured. You can explain to callers that you’ve already done your giving for the year (and you can just ignore emails—I would hesitate to trust an out-of-the-blue request via email).

If you’re checking out a new charity, the go-to resource is CharityNavigator.org. This website tells you how much a charity spends on marketing and how much money makes it into their programs, gives executive salaries and other financial information, as well as an overall rating of the organization. No mainstream charity manages to have 0% operating expenses, but if you see one that devotes 99.5% of its revenue to salaries and marketing, with only 0.5% going toward programs, you know it’s one to avoid.

Pension Advance Schemes

If you receive monthly payments from a pension, settlement, lottery winnings, or other similar source, it’s a good idea to be aware of schemes that offer a lump sum cash payment in return for some or all of your income.

There can be good reasons for considering it. Living on a fixed income, such as Social Security plus a modest pension can make an unexpected expense (medical event, major house repair, etc.) difficult to pay for. By exchanging some of your pension payments over a certain amount of time for cash, you can cover those expenses without completely upending your life. It’s rarely an ideal situation, but it can work out.

(It can work out. It doesn’t always work out. It often doesn’t work out.)

It is extremely important to know exactly what you’re agreeing to before signing anything. No matter what language it’s dressed up in, these plans are loans. They are giving you a certain amount of money, and you’re paying back a larger sum over time.

There are a lot of companies offering this type of product, and I’m sure some of them aren’t actively trying to inflict harm. But there are tons of unscrupulous lenders offering pension advances that thrive by ripping people off.

Before jumping into a pension advance, I first would recommend looking for literally any other option. Got a credit union nearby? Start there. Ask about a personal loan.

If you really still want a pension advance, go in with the understanding that you are getting a loan, and proceed with extreme caution. What is the effective interest rate you’ll be paying? Some pension advance schemes are effectively charging a nearly 100% annual interest rate. If they deny that it’s a loan or won’t tell you a rate, walk away. Exactly how much will they take each month, and for exactly how long will you be paying them back? Get everything in writing, and the second something seems fishy, bail out and do not proceed any further.

What is Affinity Fraud?

At the beginning of Side 3 of Grand Funk Railroad’s 1970 Live Album, Mark Farner shirtlessly tells the audience this (edited for clarity):

Brothers and sisters, there people out there that look just like you, or maybe your brother…but they’re not. And when they hand you something, don’t take it. Don’t take it, okay?

Now, Mark was referring to the kind of party supplies that might circulate at a rock concert in 1970, but he also could have been talking about affinity fraud almost fifty years later.

Affinity fraud targets people who are members of a group, and uses that group identity to lure victims into the scam. Some of the most common targets are religious groups or church members, people with a shared ethnicity, or those who have served in the military. The con artist will be a member of the targeted group, or will claim to be, and attempt to recruit others to help bring in more victims.

Generally, these scams take the form of phony investments or Ponzi schemes.

There are a variety of ways to identify affinity fraud. Here are a few things to look for:

Is the person offering the investment using membership in your group as his “in?”

A shared identity can be a great way to build community, but remember that the human tendency to trust those we see as similar to ourselves can be used against us. Just because someone claims to be a member of your group doesn’t mean they are. There is no physical barrier to lying; “I’m the same as you” can be uttered by anyone, whether it’s true or not.

Are the investment materials (brochures, flyers, etc.) filled with symbols or phrases familiar to your group?

A con artist targeting members of a church might festoon his written information with symbols or scripture (some even go so far as to imply that the “opportunity” has been sent from above). On the other hand, a scammer going after veterans might use flags, ribbons or eagles. Humans are emotional, and we respond strongly to symbols, but be cautious around any kind of investment offer that seems to be hitting those symbols a little too hard.

 Are the promised returns extremely high, or is the investment presented as guaranteed or having little-to-no risk?

Real investments carry risk. There is always a non-zero chance you will lose some or all of your initial investment. An investment presented as “risk-free” or “guaranteed” is always going to turn out to be a scam, because that’s not how investing works. Any investment promising double-digit returns is to be taken with a grain of salt.

Do the returns hinge on you recruiting others into the fold?

That’s a Ponzi scheme. You will lose all of your money.

Is the broker licensed to sell investments?

Never invest through an unlicensed broker. Whatever your (or your group’s) opinion of regulations, licensing requirements, or government in general, anyone selling investments without a license to do so is breaking the law. What other laws is this person willing to break? What about the ones that make stealing illegal? And don’t fall for excuses like, “I’m not licensed because the government doesn’t want your group to have access to this amazing opportunity,” either. That’s just someone stoking your emotions to goad you into action.

The U.S. Securities and Exchange Commission has a nice PDF available for download that goes into more detail about affinity fraud and how to report it to the SEC.

(However, it doesn’t contain a single reference to Grand Funk Railroad. You gotta read my articles for those.)

Two Things That Scream ‘Investment Scam’

There are a million online articles about investment fraud and how to recognize the signs. And you can go the detailed route of researching the opportunity, checking out the broker with FINRA, asking if the broker is licensed and with whom, and other steps.

Or you can go the expedient route and just look at these two questions:

  • Is the return being described as “guaranteed” or “risk-free?”
  • Is the broker telling you the investment is a “secret?”

If the answer to either question is “yes,” do not proceed any further. You are about to fall victim to an investment scam.

There is no such thing as a risk-free, guaranteed investment. Companies can use the money you invest to make good decisions that increase profits, which comes back to you as an increase in the value of your share; or they can make poor decisions or get buried by  a changing marketplace. Either or both can happen, and past performance is not an indicator of future growth. Any broker telling you the investment will only increase in value, with no risk of loss, is lying.

Scammers posing as investment brokers will sometimes attempt to portray the alleged opportunity as a “secret” that only certain people are allowed to know about. Usually this is a tactic to convince a potential victim not to talk to anyone else. Outside input is dangerous to scammer, since it only takes a couple people saying “that sounds kinda shady” to threaten the whole operation. That aroma of secrecy can also be used to dodge questions such as, “Why can’t I find any information about this investment online?” The reason is because it’s not legitimate.

As for actual “secret” investment deals…well, you know those high-profile cases where people get put in jail for insider trading?

Now, just because an investment scam passes this little test doesn’t necessarily mean it’s real. A savvy con artist may present a more realistic pitch, at which point you’ll have to do more research. Another question you can ask: who approached who?

The Do Not Call Registry Doesn’t Stop Scam Calls (But Sign Up Anyway)

I’ve heard it dozens of times: so-and-so signed up for the Do Not Call Registry a year ago, but they keep getting scam calls, so obviously it doesn’t work. What’s the point?

And I’ve always replied: put your phone numbers on the list anyway.

Why?

Because it’s a filter.

When you put your phone number on the Do Not Call Registry, after a few weeks, you will stop getting calls…from legitimate businesses that use cold calls as their primary sales technique (telemarketers, in other words). Companies that do not want to be shut down for breaking federal laws.

You won’t stop getting calls from scammers. They’re not referring to the registry in the first place because they don’t care. At the same time, you will already know not to even bother picking up the phone, because you know that anyone calling once your phone number is in the Registry is willfully breaking the law. You already know they’re dishonest, without hearing a word they say. All you have to do it let it ring until it stops.

Utility Scams are an Ongoing Threat

It’s been a while since I brought up Utility Scams, so now is as good a time as any for a quick recap.

Utility Scams are an example of a distraction scam, and they generally target seniors. These scammers generally work in pairs. One will knock on the door and claim to work for the local utility company. He will claim they are testing something, or fixing something, or there’s some kind of urgent situation that requires the resident to allow him inside the house to do something with the circuit breaker.

While the homeowner is busy with this person in the basement, his partner will enter the home and look around for cash, jewelry or other valuables to steal. After a few minutes of pretending to work on something, the first person will claim the job is done and leave. By the time the resident notices the robbery, the scammers are long gone.

Your utility company should always contact you in advance if there really is an issue that requires someone to enter your house. However, such scenarios are extremely unusual. If someone appears at your door claiming to represent a utility, politely ask to see an ID badge. Regardless of the response, ask them to wait a moment. Close the door and lock it, make sure any other doors are locked, and call the utility company directly if you’re still unsure, or call the police if you’ve got a bad feeling. Do not simply let a stranger into your house on his word.

It’s also not a good idea to let on that you think this person is trying to commit a crime. This is an in-person scam, and it carries risks that aren’t really present with a scam phone call from the other side of the globe. They might just run, but they might not. It’s better to pretend to play along. Most likely they’ll take off as soon as you close the door—the point of most scams is to get in and out quickly. Standing around on someone’s porch in broad daylight for more than a couple seconds isn’t going to appeal to someone who doesn’t want to be seen.

Stay vigilant.