Filed under: Consumer experience, Marketing and advertising, Scandals, Personal finance
A few days after I opened an investment account for an elderly couple, I started receiving important messages from the husband. I called him back as soon as I could, and he excitedly told me that he was about to receive a substantial sum of money. This seemed very strange because I had reviewed his financial situation only two days earlier, and I knew that he wasn’t anticipating any kind of inheritance or windfall. When I asked some further questions, the old man told me that he’d just received a letter saying that he’d won a South African lottery worth $2 million. All he needed to do was give the sender of the letter his ID number, address, birth date and bank information within 72 hours, and the money would be his.
This immediately aroused my suspicions, and I asked him if he had ever purchased a lottery ticket for the South African lottery. When he replied that he’d not, I asked him if he thought it strange that he’d won a lottery that he never even entered. My client persisted, and he asked if he could show me the letter. After reading the letter, it became even more obvious that this was some kind of scam. After doing some on the web searching, I even found the exact same letter that he received, with a warning that this was a famous identity theft scam. Thankfully, I convinced the man not to send in any information, averting what could have been a disaster.
While he was saved many people fall victim. In fact I was prompted to write this because I just got off the phone with someone who had already lost $1,000 and worse yet, he’d also given his bank details.
Money Doesn’t Grow on Trees
My client is not an uneducated man. Yet even he, a retired physician, had almost been fooled by this letter. And he’s not the only one. There are several unsuspecting people who end up being taken advantage of by such frauds. Many of us could use a few extra dollars and in our naivete, do not comprehend the criminal mind, are also at risk from these predators. Sometimes, they have been persuaded to join certain real estate schemes that promised large returns and left unsuspecting investors bereft of their savings without any legal recourse to try and reclaim their money.
How to Know
Here are some of the things to look for if you’re offered a prize in a lottery or the opportunity to win something that sounds too good to be true:
First of all, organizers of a genuine lottery or competition wouldn’t require the winners to supply their private banking information or pay fees to collect the prize. Legitimate sweepstakes don’t require that you make an advance payment of “taxes” or “shipping and handling charges” of hundreds or thousands of dollars to receive a prize. Legitimate promotions also provide contact information where individuals can ask that their names be removed from their mailing or calling list. Remember: If you give out your basic personal information, you could fall prey to an identity theft.
Second, if you receive one of these emails, immediately google all the names mentioned and you can determine swiftly if it’s legit.
In the case of property deals, be wary of advertisements pitching various real estate opportunities full of seductive claims, promising minimal investment and returns over 200% for three years, or a “guarantee” of some unlikely return. For this reason, it is important to know that if something sounds too good to be true, it probably is. And even if something does sound worthwhile, you should always read the fine print. Often, the small print at the end of the advertisement makes it very clear that the “guarantee” comes with many strings attached, and in fact you can even end up losing money.
It is also vitally important to ask pointed and specific questions to get a superior understanding of the investment. Never forget to ask about any risks. If you’re told, “There are no risks,” or lip-service is paid to explaining them, there’s a good chance that you are not getting the full information about the investment, and you should think twice about investing.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer’s fund has no position in any stock mentioned, as of 3/14/08.
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