How to Recognize and Avoid Scams, Swindles, and Rip-offs
So many people are looking for ways to make more money. When it’s hard to find a job, it’s easy to turn to the abundance of “opportunities” offered in just about any newspaper or magazine. Many of these ads are legitimate, but too often they are too good to be true.
We all believe that we aren’t “dumb enough” to fall for a scam, and yet every year people lose $200 billion or more to scams, according to author Graham M. Mott. How can you tell the difference between a legitimate opportunity and a scam?
How to Recognize and Avoid Scams, Swindles, and Rip-offs is very helpful. Mr. Mott writes from painful personal experience. He lost $30,000 on a scam. Through it all, he’d kept a journal of his business dealings with the company in question. Believing that the mistakes he made are the same basic mistakes made by others trapped in a scam, his wife convinced him to expand his journal into a book, in order to help others avoid getting hurt. Calling himself a “scambuster,” he’s now on the warpath against scams and con artists.
“Many times, the prime candidates to be ripped off are those who have been involved in a previous scam. Hoping to recoup their losses, people take unnecessary risks. The majority of losses are in the range of a few dollars to a few thousand dollars. Because of the smaller amounts of money that are lost, few people report their losses, file complaints, or seek legal aid. Legal aid can cost more in time, money, and emotional strain than is worthwhile. It is much less costly to ask for legal advice before you make a mistake than afterwards. Losing larger sums of money can be so embarrassing to people that their embarrassment and shame far outweighs their desire to do anything about the loss.”
How could he have lost $30,000 to a scam?
The lessons he learned:
- Trust—He didn’t question the company’s honesty or ethics.
- Expertise—He knew very little about the type of business in question, and he didn’t do enough research on the subject.
- Legality—He didn’t seek legal counsel concerning the contract or his legal rights.
- Greed—He did not question the “too good to be true” aspects of this “golden” business opportunity.
- Expenditures—He spent far too much money on a business with no track record in his state. (The only testimonials came from representatives who were located out of state.)
- Location—His communications with a company located out of state were totally dependent on whether they would talk to him and support him.
- Title—He thought purchasing a “Major Distributorship” would give him a position of power in the state and with the company.
- Competition—He bought a “protected territory” believing he would have no competition from the company.
- Sales—He did not personally check out whether the product was saleable by showing it to potential distributors.
- In Retrospect He saw that he had invested assets that he couldn’t afford to lose while his pride would not allow him to see all the foreboding signs. Thus the lessons continued to increase and became more painful as his personal power was diminished.
- The most important lesson—He would never again purchase another company’s business opportunity. He wouldn’t give away his power and be reliant on someone else for his success.
Why are scams so appealing?
- The greed factor. We feel as if we can’t miss or are on to a sure thing. This is when we are most vulnerable. It is especially difficult for us to step back, think rationally, and keep the proper perspective on these types of seductive offers. Once we have made the decision to go ahead with an offer, we no longer voice any objections. Our fate is sealed.
- The ease factor. We strive for a “life of ease.” Beware of anyone telling you how easy it is. Whether it’s making money, selling the product, redeeming the prize, or taking the dream vacation, most things of value take time and effort to achieve. You also may be told that no special training, aptitude, or experience is necessary. Nothing is that easy; hard work is required to be successful.
- The time factor. We have learned the pleasures of instant gratification or the “quick fix.” We tend to be impatient and want to make things happen right now. Consider the source when you are told it will not take long to start earning money or profits. Remember, any new business venture takes time to develop, be successful, and be profitable.
You can’t be too skeptical in today’s world. If something has grabbed your attention, you need to find out why.
– Am I reacting or responding to advertising or sales hype?
– Is this something I am acquainted with or have I decided on this new venture without getting all the necessary information?
– What part do the “greed factor,” “ease factor,” or “time factor” play in my decision?
The promise that you can become rich quickly and easily appeals to almost everyone. If you can recognize the factors that the salesperson is appealing to, then you will be able to assess the situation and make a proper decision.
If you have questions about a potential “opportunity” and want to be safe rather than sorry, we advise you to consult this book first!
How to Recognize and Avoid Scams, Swindles, and Rip-offs ©1994 by Graham W. Mott. Golden Shadows Press, P O Box 687, Littleton, CO 80160. ISBN# 0-9633155-1-X; $14.95 (+$3.00 s/h); call (800)844-7532 to order.
The above article is from Cornucopia, Ideas for Better Living; a newsletter my late wife and I wrote for several years. Still helpful information today.
Here’s to your business success.
Jerry D Ross
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