Wealth Building

Do your research first: Checking things out before you commit to a deal is a more effective and practical way to safeguard your money than trying to get a refund afterward.

The turbulent financial market may have you looking at alternative investment and money-making opportunities – or maybe they’re looking for you. If there’s a mysterious financial model or an offer promoting miraculous returns, most likely it’s a scam.

Among the business opportunity and wealth-building scams that people have lost money to are the Seminar Pitch; the “Nigerian” Scam; foreign lotteries; and check overpayment scams. Here’s how you can avoid them – and save your money.

The Seminar Pitch

You get a letter or see an infomercial promoting a seminar or conference that promises to help you make a lot of money. Supposedly you’ll get valuable information about how to invest successfully or operate a profitable business. The “success stories” and testimonials seem to show that anyone who attends the seminar can make money from the investment or business program if they just follow a few steps. Some promoters even claim to have gotten rich from their own investment in the program.

The Gut Check: Consumers who invest in these “opportunities” usually find that the pay-off doesn’t match the promise – and that they can’t recover the money they spent.

To Do

How can you avoid getting hit by a seminar pitch?

  • Take your time. Don’t rush into buying anything at a seminar, in spite of the upbeat atmosphere. Avoid high-pressure sales pitches that require you to buy now or risk losing out on the opportunity.
  • Investigate the business you’re considering investing in. Talk to experienced business people and experts in the field before investing any money.
  • Be wary of “success stories” or testimonials of extraordinary success. The seminar operation may have paid “shills” to give glowing stories.
  • Be cautious about purchasing from seminar representatives who are reluctant to answer questions, or who give very general answers to your questions. Legitimate businesspeople are more than willing to give you specific information about the investment, the sales opportunity, and their experience.
  • Ask about how much money you need to qualify for the investment or sales opportunity, and ask about the company’s refund policy. Get this information in writing. But remember that you may never recover the money you give to an unscrupulous seminar operation, despite the operator’s stated or written refund policies.

The “Nigerian” Scam

Claiming to be officials of a foreign government, deposed royalty from a foreign country, businesspeople or the surviving spouses of former government honchos, con artists offer to transfer millions of dollars into your bank account in exchange for a small fee.

The Gut Check: Stop! Ask yourself two important questions: Why would a perfect stranger pick you – also a perfect stranger – to share a fortune with, and why would you share your personal or business information, including your bank account numbers, with someone you don’t know?

To Do

  • If you receive an offer via email from someone claiming to need your help getting money out of Nigeria or any other country, forward it to the FTC at spam@uce.gov. If you receive an offer via postal mail, contact the FTC toll-free at 1-877-FTC-HELP (382-4357).
  • If you have lost money to one of these schemes already, call your local Secret Service field office. The number is listed in the Blue Pages of your telephone directory.

Foreign Lotteries

Scam operators convince people to buy chances in supposedly high-stakes foreign lotteries with pitches that generally follow a pattern: you should send money to pay for taxes, insurance, or processing or customs fees. The amount may seem small at first, but as long as you keep paying, the requests for funds will keep coming – for higher and higher amounts.

The Gut Check: Victims lose thousands of dollars. Most promotions for foreign lotteries are phony. Many scam operators don’t even buy the promised lottery tickets. Others buy some tickets, but keep the “winnings” for themselves. In addition, lottery hustlers use victims’ bank account numbers to make unauthorized withdrawals or their credit card numbers to run up additional charges.

To Do

  • Ignore any solicitation for a foreign lottery promotions. They’re all phony and illegal.
  • If you receive what looks like lottery material from a foreign country through the postal mail, give it to your local postmaster.
  • Keep your credit card and bank account numbers to yourself.

Check Overpayment Scams

Need some quick cash? Thinking of selling a car or another valuable item through an online auction or your newspaper’s classified section? You may get a response to your posting or ad with an offer to use a cashier’s check, personal check or corporate check to buy the item you’re selling. At the last minute, the so-called buyer (or the buyer’s “agent”) comes up with a reason to write the check for more than the purchase price, and asks you to wire back the difference once you deposit the check.

The Gut Check: You act in good faith, deposit the check and wire the funds to the “buyer.” But the check bounces, leaving you liable for the entire amount. The checks are counterfeit – good enough to fool bank tellers.

To Do

  • Know who you’re dealing with. In any transaction, independently confirm the buyer’s name, street address, and telephone number.
  • Don’t accept a check for more than your selling price, no matter how tempting or how convincing the story.
  • Consider an alternative method of payment. As a seller, you can suggest an escrow service or online payment service. If the buyer insists on using either a particular escrow or online payment service – or one you’ve never heard of – check it out. Learn more about escrow services and online payment systems at www.onguardonline.gov.
  • If you accept payment by check, ask for a check drawn on a local bank, or a bank with a local branch. Then visit the bank to make sure the check is valid.
  • If the buyer insists that you wire back funds, end the transaction immediately. Legitimate buyers don’t pressure anyone to send money by wire.
  • Resist any pressure to “act now.” If the buyer’s offer is good today, it should be good after the check clears the issuing bank.
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