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No one is too smart to not fall for swindlers. Pause, think before giving up your money, writes Mapalo Makhu.
As the economy gets tougher, there is a rise in the number of financial scams. Scammers are becoming niftier in their methods too. Financial scams can affect anyone, from those with or without degrees to those who work in the financial services industry. Scammers don’t discriminate.
From phishing scams, change of banking details scams and internet romance scams to online goods scams and email hacking scams, there are tons of people waiting to swindle you out of your money. Even I have been a victim of one such scam.
Having gone to a website to buy goods online, I did not reference and double-check if the website was legitimate. I put in my banking details and paid for goods that never arrived. Although it was a small amount, I still felt cheated and reckless. How did I not see the red flags?
How is it that even people who consider themselves smart still get scammed and only see the red flags once they have lost their money? Because most people believe they are simply too smart and rational to be scammed and they forget to do their checks and balances. We often tell ourselves that it won’t happen to us, until it does...
An interesting study done in the US by the self-empowerment organisation AARP found several characteristics that can drastically increase the likelihood of your getting scammed.
- Are you generally impulsive and prefer to make decisions without careful thought?
- Do you sell items on online auction sites?
- Have you recently had a negative change in financial status?
- Do you often feel isolated or lonely?
- Have you recently lost a job?
Let’s face it, we would all like to make a quick buck without much effort, but things hardly work like that.
So how do you spot a scam? What are the red flags you should look out for?
IF IT SOUNDS TOO GOOD TO BE TRUE, IT PROBABLY IS
I know you’ve heard the saying before and although it is a cliché, it is true. If someone promises ridiculously high returns without showing you how this is consistently achieved, see it as a red flag.
In most instances, the scammer will normally be vague in giving you the details. They will show you only the best part of either the product or service without talking about the risks involved in investing.
BE WARY IF THE SALES PERSON IS PUTTING TOO MUCH PRESSURE ON YOU TO MAKE A DECISION QUICKLY
While some opportunities only have a certain window period open, be suspicious of making a decision too quickly because the sales person is putting you under pressure to sign on the dotted line.
If the sales person has nothing to hide, they will answer all your questions without rushing you and may even ask you to go home and think about it first before signing.
If you are looking for any investment where you will part with your money, first verify that the company is registered and licensed by the Financial Sector Conduct Authority (FSCA). You can check on the FSCA website by putting in the company’s FSP licence number on fsca.co.za/Fais/Search_FSP.
If they are not registered with the FSCA and you lose your money, you will have no recourse other than to take the loss.
According to DirectAxis, here are some features of a scam:
- Emails and SMSes that are not personalised. You are addressed as sir/madam or client;
- You are offered money for nothing, and to “claim” this windfall all you have to do is deposit money to release the funds;
- You are urged to respond soon or the offer expires;
- You are told to click on a link to redeem your inheritance or some sort of lotto winnings; and
- Poor grammar and bad spelling.
When dealing with money matters, it is important to listen to your intuition. If a small voice is saying maybe you need to think twice before you give your money to the goose that lays golden eggs, listen to it.
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