Bang, crash, crunch. That’' the noise of me hitting my head against the desk every time I hear of an innocent investor losing thousands of dollars through falling for the most obvious tricks in the book.
It's Fraud Awareness Week 2008 this week so it's a good time to remember some of the most basic rules of protecting yourself from the sort of crooks that try and steal your money.
Every year they use ever more elaborate rules to fool you. For example once upon a time it was common to get an email from Nigeria written in poor English asking for you to send a payment to a bank account overseas to release your share of a $1m or similar windfall. These days I regularly get emails from people posing as investment advisers who want to place their clients' money in New Zealand through me, providing I pay a sum of money up front.
Another classic is affinity fraud. This is where someone in our 'group' tells us about an investment scheme with fantastic returns. Often these people have been duped themselves to join what turns out to be a pyramid scheme, where the people at the top run off with all of their money instead of investing it. Over the past decade more than their fair share of churchgoers in New Zealand have been sucked in. That’s because we have a tendency to trust people who belong to the same group as we do.
Ask yourself when you're approached for a deal that seems too good to be true:
Did you receive a cold call?
Were you asked to sign up on the spot to qualify?
Do you have to hand over money to get the prize or investment?
Have you been asked for bank details or personal information?
Do you have comprehensive contact details for the company?
I can't finish writing about this without recounting an incident that happened just as I was typing out these rules. My phone rang and a foreign voice said: "This is Baycorp, can I have your date of birth please." As someone who doesn't do debt and knew something was up (other than mortgages) I instantly thought I’d encountered a crook and of course refused to give him my information. I hung up and called Baycorp's switchboard to rant my way all the way to the Australasian sales manager before I got someone who admitted their processes weren't exactly what they ought to be and that asking cold called people for their date of birth wasn't good practice.
None-the-less you can't be too careful. Giving personal data to cold callers can result in identity theft and your bank or Trade Me account being plundered if you're not too careful. Remember scammers breed like rats and get smarter every year.
Have you been targeted? Do you know any good websites with information to prevent scamming?
Educating yourself about the latest scams can save you an awful lot of money. Try some of these podcasts and videos:
Symantec on Phishing scams
The truth about Paypal Reverse Scams
The Real Hustle – Bartender scams
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