Avoid These Scams: Obvious and Less Obvious Pretty much everyone wants to get rich quick, but there are only so many ways to get there honestly and legally - and most of them take a certain amount of good luck in addition to hard work. Fortunately (pun-intended), there are a million ways to make money in dishonest or illegal ways - and if you’re willing to put in obsessive-compulsive type of hours of hard work, it’s a sure bet because there will always be millions of suckers out there. Whether you’re looking for some ideas to start your own fraudulent business or hoping to avoid getting scammed, take a look at this list of great/damnable activities: Pyramid Schemes The Pyramid Scheme has been one of the most high profile scams in the 20th Century of the Western World, and there are still Pyramid Schemes floating around all the time. The idea behind a pyramid is that each person involved gets a certain number of people to join and then those people each get a number of people to join and so on. The people joining give something, usually money, to the people above them in the pyramid in hopes of one day receiving larger benefits from the people below him or her in the pyramid. Today this usually plays out in the form of a letter asking you to send money, maybe $100, to the 20 people above you on a list. Then you get 20 people to join the group and wait for the money to start rolling in as they each send money to you and the other people on the list. The problem here is the exponential growth of a pyramid. For these particular pyramid to have only five levels of members there would have to be 3.2 million members - the sixth level would have 64 millions people! At some point the pool of potential recruits will run out and then people who are low in the pyramid get hosed as there is no one to pay them. Many Pyramid Schemes are illegal. A quick way to recognize an illegal pyramid is to look for these three characteristics: 1) You have to make some sort of investment to be able to recruit other victims - er, other future millionaires; 2) When you successfully recruit someone you receive some sort of compensation; and 3) Your new recruits now have to make an investment to be able to recruit and also receive compensations when they successfully recruit. If each of these three characteristics are present, chances are it is illegal There are ways that groups get around the laws. For example, instead of making an investment, they might have you sign documents declaring that you are making a one-time unconditional gift to someone - something that people do fairly frequently. Or they be selling a product or products and ask you to join in selling it - after you have bought plenty for yourself of course. Recent groups running Pyramid Schemes have been International Metals and Trade Corporation, American Gold Eagle, Oxford Savings Club, Global Assistance Network for Charities, F.I.R.E - Family Internet Real Estate, the Professional Savings Network, and Amway - oh wait, I think Amway has usually steered clear of legal troubles by fitting into the next category. Multi Level Marketing Multi Level Marketing plans are sometimes difficult to tell apart from Pyramid Schemes. And, ok, MLM are not always scams, but for the most part people usually don’t make as much money as the people advertising it. If you really believe in the products you are hawking or you really believe in yourself getting rich, and don’t care who you sell crap to, and you are willing to work really, really hard - then it is possible that you might make a bunch of money in an MLM program. MLM is typified by groups like Mary Kay or Cutco, where salespeople might pay to buy a set of products for themselves and then put on presentations for people. There really are some good MLM groups, but you need to be very careful when joining such an organization. Investment Scams You might get a letter offering you an unbelievable price on a normally risky sort of investment, guaranteeing that this time it is a sure thing. This sort of investment scam is sometimes called “wine and paintings” because it is typified by the offer of either some sort of value-increasing liquor or fine art for a “low” price, promising that you will be able to sell your investments in a few years for many times the purchasing price. When you actually get the paintings, you find out that they are actually cheap prints, and the wine is a case of $20 bottles. At least you’ll have a quantity of booze to take your mind off those ugly prints that your wife won’t let you hang in the bathroom… Another and rather illegal scam involves a “tip” to buy stock at a low rate. In the end the company isn’t really about to do anything but raise capital - or the company doesn’t even exist. Pay Now, Get More Later Scams A common scam in recent years has gone a bit like this: Some third world government official - usually from Nigeria - is in serious trouble and needs to get a ridiculous amount of money out of his country. This scam asks you to lend your bank account with a large promised reward. All you have to do is give them your account number and/or pay a processing fee of some sort. Another common Pay Now, Get More scam is one where you have won a prize of some sort. Perhaps they are waiting to ship it through customs and just need you to pay the customs fee. A legal office is holding on to the prize or an inheritance and they need you to pay a “small” amount for them to help you get the money. Or you might have “won a free vacation” but before you can go you have to pay a certain amount upfront - or maybe they will hit you later with a bunch of costs that they don’t ever mention. Credit Card Scams Whether they are stealing your credit information or getting you to pay money for a new credit card, scammers love to pick your pocket - and unlike the local watering hole, they will always take plastic. Skimming is when you give your credit card to pay for something and they take it to the back room to “run it”, which they do - through a special machine that allows them to make a copy of your card. Though credit companies are trying to make this more difficult, someone might find out information about you and then fill out a credit application in your name - next thing you know, someone is using your “replacement card” to get $50 cash back at every grocery store in the state. And now with the internet, there are a million sites where you can buy things - or buy subscriptions. Who’s keeping track of how many of these sites are legitimate? Actually, I - the writer of this article - would appreciate it if you could forward me your credit card info. Just to find out some information about the people who read what I’m writing, that’s all - nothing big. Goods Not There Scams The internet has become a place where crooks can hide without much fear of getting caught. In this scam, someone is selling something at an unbelievably low price. As soon as you send the money, they’ll ship the item. Of course, once they have your money, you will undoubtedly never hear from them. This actually happened to my brother trying to buy a camera on Ebay but fortunately he realized what was happening before it was too late. Obviously, sites like Ebay try to keep scammers off their sites, but there is only so much they can do with the mass quantity of buyers and sellers using the site. The inverse of this situation happens when someone buys something from you and wants to pay with a check for a larger sum than the price of the product, asking you to send back the refund. If you’re smart you’ll wait until the check clears before sending the refund. But then it turns out that it was foreign check and while the sum has been nominally added to your account, the check actually clears when it is returned to its issuing bank, which could be thousands of miles away. Now this guy has your television and your money. Charity Scams Sometimes scammers appeal to the lowest common denominator - I mean you do want to help out people who are in more need than you are, don’t you? Telemarketers working for charity scams are usually very aggressive and will use mind tricks to try to get you to give, like thanking you for a contribution that you promised that you probably never actually made. Or did you? Its ok to do a little research before donating to a charity. Make sure that they are nationally registered as a charity. Find out what their administrative costs are. Beyond avoiding giving your money to someone who is not going to do anything , you should be careful to give your money to an organization that is going to use that money wisely. Thus ends the more serious discussion of scams for this article. The following is a list of other sorts of scams, all of which I think are sketchy, but surely some of you will disagree: Playing the Lottery My high school track coach called it a voluntary tax for the poor. People who have enough money don’t really play the lottery - and when they do, it normally isn’t to the point where they come home with nothing to eat and no money to buy anything to eat. I’m not saying, Don’t ever go buy a lottery ticket, its evil! I’m just saying that it is usually not a very good investment to put a lot of money into. There is a method to some gambling - like if you’re a professional poker player - and you know enough and are good enough to know that you are going to win. Or if you decide to spend the $10 that you would normally pay to see a movie and instead buy some lotto tickets - consider that recreation. But when you start spending your rent money or your grocery money on the lottery - or any gambling at that - and you think that surely one of these days it will pay off… Well, you need to find someone to help you break your destructive habit because you are getting suckered like a world class sucker. Going to the Movie Theatre Now wait a minute, you tell me, Going to the theatre isn’t getting scammed, it paying for some worthwhile entertainment. Granted, and again, I’m not saying you should never go to the theatre. Seeing a movie on the big screen with darned good sound is an enjoyable experience. Going every once in a while is fun, and it isn’t terribly expensive, but if you are going several times a week those $9 or $10 tickets really start to add up. And while leisure is important, there are a great number of leisure activities that are cheaper/free-er, equally enjoyable (at least once you get to know them), and will have great side-effects. Of course I’m talking about things like reading, listening to music, making music, and all kinds of outdoor or athletic activities - things that could make you a smarter and more interesting person as well as getting you in better shape so that next time you go to the theatre you won’t have to buy two tickets… And besides think of all the benefits of watching movies at home when they come out. You get to watch them with friends and talk if you want to, cheaper and better snacks, no lines to wait in, and it’s a lot easier to make out on the couch than it is in theatre seats! Elementary School Magazine/Candle/Popcorn Sales If I have ever seen a scam this is it. If only there were an easier way for our schools to raise money than having kids compete to sell the most magazines or novelty items out of a catalog filled with stuff that will soon go from sitting in a box on a shelf at the warehouse to sitting in a box in your basement… If only there were something else… Come on sucker! Just give some money to the school. We all know that most public schools are under funded and need a little help to do projects. If the school needs $3000 for a new piece of playground equipment or to repaint the graffiti covered walls, instead of using these programs where half the money goes to the company that makes those festive-holiday-candles or chocolate-covered-cashews, try simply giving the money to the school. In the end you will be spending less because there won’t be any of the overhead charges, and you won’t be accumulating more junk in the closet. Insurance No, I’m not even talking about insurance fraud - though that is something that you ought to look out for (especially people trying to sell big life insurance policies) - I’m just saying what anyone who has had extensive experience with insurance companies already knows: The insurance industry in the United States is a racket. And the worst part is that in a lot of cases we are required to have it. Got to have car insurance to drive. Have to have health insurance to go to school. Have to have homeowner’s insurance. Not that insurance is in itself bad, but there are a few things that are corrupt about insurance companies - and for the most part there is nothing that we can do about it right now. Insurance companies try to get you to sign on for more stuff than you need, and much of the time the add-ons add a more significant amount to the price of the policy than they add to the overall value of the policy. And then there are deductibles. Why are we paying $250 dollars a month for car or health insurance and then having to pay the first $500 each time we get rear-ended and have to pay up to $2500 in medical expenses throughout the year? We pay that much money in case something catastrophic happens: If you total your car, the $500 deductible is nothing, and if you end up in the hospital for a few months after that accident, the $2500 you have to pay for medical pales compared to the $1 million bill you’ve racked up. But then, when you get into an accident of that sort, the first thing the car insurance company does is try to prove that since you were at fault you they don’t really owe you money; and your medical insurance company tries their darndest to drop you because you no longer work for the company that you had insurance through or because you aren’t a full time student right now. Of course I’m not a full time student right now - I’ve been in the hospital for 4 months! And then, you come to find out that a big part of the reason that medical supplies are expensive is because of insurance, and that some hospitals won’t recommend some corrective procedures or therapies because they are expensive and they don’t want to piss off the insurance companies by giving a prescription to someone for a $15000 piece of equipment. Ah yes, the insurance industry is truly a racket E-mail/ IM/Text Messaging The reason that this is included on my list of scams is because, though you aren’t getting scammed out of money, you are getting scammed out of having real relationships. I don’t think all of these electronic mediums are bad, but if you have had most of your significant conversations in the last year using these three mediums, you are getting suckered by our media culture. Almost Everything on the Internet That’s right, almost everything on the internet is a scam. Even this little piece of writing here is a scam. Not a bad scam that will make you lose huge amounts of money, but the kind of scam that led you on a wild goose chase at the beckoning of internet marketing gurus who really just want you to click on the advertisements embedded in this page. And especially if you have read to the end of this article - you’re getting scammed - I don’t really know anything about scams or scamming (at least not the sort that we’re talking about here!) and yet you, who wanted to find out about scams, have read all the way to the bottom of these words.
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