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Written by Charles Murray
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Friday, 04 April 2008 01:40 |
With more than 468,000 reported incidents of financial fraud in 2006 and another 246,000 reported incidents of identity theft in the United States, according to Consumer Sentinel, an online complaint database, Americans need to redouble their efforts to protect their finances and financial reputations.
Contrary to public opinion, the elderly are not the most-victimized group.
The line separating legitimate and illegitimate business dealings is often hard to spot. That’s no accident. Swindlers copy the methods used by law-abiding firms to develop business. In fact, businesses frequently start out on the up-and-up, but turn crooked because of poor management or financial difficulties. In cases like these, the swindler’s goal is to keep any troubles under wrap for as long as possible and act as though nothing is wrong.
If you are swindled, you will have to earn an even greater amount of money to replace the money you lose – since the money lost was in after-tax dollars, and the money required to replace it will be in pre-tax dollars.
To avoid being scammed, consumers and investors should keep the following points in mind:
1. Every deal is a potential scam: Recognize that fraud is an act of deceit by one party intended to induce another to part with something of value.
2. Map out your goals before shopping or investing: There’s a difference between “buying” and “being sold.”
3. Avoid mixing business with pleasure: According to the National Institute of Justice, the attempt to defraud is more successful if a person knows or knows of the offender.
4. Don’t get greedy: Remain calm and dispassionate.
5. Be suspicious of “inside information,” “hot tips” and “one-time offers”: Why you instead of Tom-Dick-and-Harry?
6. Educate yourself: Beware of getting all your information from the seller.
7. Double-check all facts: A cheat doesn’t want himself or his deal scrutinized.
8. Don’t wilt when the heat is turned up: It takes a secure person to say “no” to pressure and manipulation.
9. Remember that a promise is only as good as the person behind it.
10. Scams copy the same methods used in legitimate business dealings—spotting the difference is difficult. Five tell-tale signs:
• Something is promised that borders between reasonable and “too good to be true”
• Victims typically know or know of the swindler
• Sense of urgency exists
• Cheat doesn’t want himself or deal scrutinized
• High-pressure sales tactics are used
Consumers and investors don’t start out as suckers. They start out looking for wealth, health, security or the like, but somewhere in their quest for happiness, victims let greed and self-esteem cloud their judgment. By keeping these tips in mind, people can avoid making certain bad financial decisions and can avoid becoming victims.
Some practical help can be found in the American Institute for Economic Research (AIER) publication, How to Avoid Financial Fraud, available to the public for just $5 at the AIER bookstore or by calling (413) 528-1216.
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