While you can’t get returns that high on a steady basis, it obviously sounded possible to thousands of Americans.
Other fraudsters target leaders in a community, such as local government officials or church leaders. They get them involved in an “investment”, and make sure they receive great returns, possibly over several years. The leaders then recommend the investment to many others, who trust the recommendation. The newcomers’ returns? Quite possibly zero.
Then there are those who say their investment is approved by a government agency, Consumer NZ or similar, and they’re kind enough to give you the phone number – or so-called phone number - of the agency so you can ring and check. Guess who answers, sounding official and reassuring?
In case you hadn’t noticed – and to be honest I would be surprised if you had noticed – this is Scam Awareness Week 2011.
Research shows New Zealanders lose about $100 per person each year to scams, says Minister of Consumer Affairs John Boscawen. Even if that were spread evenly, it would be enough to annoy everyone. But of course it isn’t. Some people lose everything.
Less-than-obvious signs that what you should probably give an offer a miss include:
• Pressure to commit quickly. If you always say “No” to such pressure,
you may occasionally miss something good – and frequently miss something bad.
• Any approach by a stranger. If any reader has ever been happy with
an investment they first heard about this way, please tell me about it. I’ve asked this before in columns, and nobody has ever replied.
• Free seminars or courses – although some fraudsters charge you to
make it look genuine. Always ask yourself what’s in it for the people offering the deal.
• An offer to sell you properties or shares “below value”. Why aren’t
they buying up the lot themselves, and selling them at a profit?
• A request to keep an investment opportunity private or secret. They
want you to feel you’re in a privileged group – and won’t check it out with a knowledgeable friend or professional.
• Claims that you'll learn “trading techniques that people don't want
you to know”, or secrets of the rich. How did you get so lucky?
• Any investment in which it’s not obvious how the returns are
generated. Complication might mean sophistication, but it probably means obfuscation. They don’t want you to understand.
• A suggestion that you check the investment with a lawyer or
accountant – and they just happen to have one on hand. Even if the lawyer or accountant is qualified, they might have had the wool pulled over their eyes. Clever fraudsters sometimes say, “Check with your own lawyer or accountant”, hoping that you’ll think, “If they’ve said that, it must be okay,” and don’t bother to make the check. Do bother.
• “You’ve won a prize”, but you didn’t even enter. Sooner or later
you’ll be asked to send money before you can collect your non-existent winnings.
A good source of information – and a surprisingly interesting read – is
www.scamwatch.govt.nz, which is run by the Ministry of Consumer Affairs. The alerts tell you about what’s been happening lately. It doesn’t hurt to check on that every now and then.
