Dollars & Sense! – March 2010

Watch out, scams are increasing.

Since September 08 it has been amazing the number of scams that have been identified.

Greed is a driving force for individuals to start them. Greed by the victim, and sometimes desperation, is the thing that makes them work.

We have seen at least three Ponzi schemes exposed in the last four months. One has operated for at least 20 years. The common denominator for each is a high rate of return on investment.

Other scams I have seen recently involved predatory home repair costs; “send us your gold for top price”; the sale of unregistered securities; and debt freedom programs.

The last year in the stock market has been a disaster, especially since the collapse of some of the largest investment firms. People are now feeling desperate to find new ways to “save” themselves and keep whatever is left.

Seniors, who trusted their financial advisors, were not served well when the majority of their portfolio was placed in stocks. And now those seniors are wondering, “who do I trust?” And this opens the door for the next salesman with a “great story or personality” to do further damage.

So how do you avoid scams?

Step one is to define your goals.

Set your own goals-do not let a sales person define them for you. They will always frame the context to their advantage and for their products.

Once goals are established– do some homework. This could be education through reading at the library or on the internet. Or get competitive bids from local businessmen. Contact the state Attorney General or Better Business Bureau regarding a company before signing any contracts. Determine if there are any non-profit agencies that can assist you in reaching a decision.

Do not believe everything you see on TV or hear on the radio. Advertising is just what it says—advertising. There is always more to the picture then can be presented in an infomercial or 30 second ad. Negative points or counter opinions are never presented. Believe me, any advertising from these sources always have some serious negative aspects to consider.

Choose to do business with someone who has the products that meet your goals. Do not do business with someone because they are such nice people. Charlatans are always “nice people” with a smooth sales pitch that does not feel like a sales pitch.

Do not be afraid of getting a second opinion from someone knowledgeable about the product or service you are considering. Obviously, do this before signing a contract.

Do not accept offers that have short time limits. The key to most scams is impulsive actions by the victims.
Remember, your money is the target of all scams. Diligence on your part will preserve and protect it