Scams Even Smart Women Fall For: How to Spot and Avoid "Get Rich Quick" Schemes
Citing these strategies, Harrington emphasizes that the people who fall for these schemes are neither naive nor careless. "The companies' techniques are really good," she says. "If it were easy to spot scams, they wouldn't succeed as often as they do." Fortunately, no matter how savvy the scammers' pitches get, certain red flags will always give away their game. Here are the tip-offs:
Guaranteed results: Scam artists overcome our reluctance to take risks by promising results. "These opportunities are pitched as guaranteed money-making ventures that people can do in their spare time," says Harrington. Take Money Movers Inc. Their literature claimed they had "developed a foolproof business plan that is so simple anyone can follow it and realize their financial goals." In reality, running any business is hard work and never a sure thing. Walk away from any company offering guarantees.
We've done the legwork: Most of us wouldn't know how to find places that want vending machines or locate doctors who need computerized medical billing services -- largely because established corporations usually have the lock on this kind of distribution. But business-opportunity scammers promise they have qualified customers lined up for your services. "The truth is that there's a very limited market for these products," says Kenneth L. Jost, assistant director of the Office of Consumer Litigation with the Justice Department. Anyone who promises customers eager to buy is probably lying.
Just talk to our satisfied customers: Most scammers will encourage you to call other buyers they claim have made big bucks with them. Usually these references are paid to lie: One former scammer testified that his boss sometimes paid him an extra $200 to pose as a satisfied customer. In just one month he persuaded consumers to invest $150,000. Another scammer, who worked for American Entertainment Distributors, a company selling DVD rental machines, bragged that he had spent $30,000 on a voice changer and satellite phone to disguise his voice and location when he talked to unsuspecting customers. How can you protect yourself against such tricks? Rather than trust company referrals, demand a list of the firm's current investors. Legitimate concerns should have a disclosure document that includes audited financial statements, lists of current franchisees and the company's officers, and any litigation history, Jost says. And take the time to visit one of the company's franchisees in person to see the business in operation.
Ask the Better Business Bureau about us: Many scam businesses are members in good standing with the BBB, which is part of the scam. "These firms join the BBB, sell for six months and then go out of business," says Jost. "By the time complaints roll in, they're on to something else."