Avoiding Financial Scams

With hundreds of thousands of financial fraud cases being reported ever year, learning how to protect yourself against scams should be a number one priority. Sometimes scams may be pretty easy to pick up on, but other times the scams may be somewhat sophisticated and more difficult to detect. Here are some tips on how to avoid financial scams – they’re not as difficult to detect as you may think.

Much of the time, scam offers are simply too good to be true. One such scam is when a company promises you an insanely high interest return in a short period of time if you invest money with them. An example of this would be a company that says they will give you a 12% return every ninety days that they have your money. For a while, you may actually get the promised returns – right up until the moment that the federal government finds out that the company you have invested in is running a Ponzi scheme and boom, there goes all your money. The rule of thumb is that if something seems too good to be true, then it is. If you come across a deal and find yourself wondering why it’s such a fantastic deal, the answer is usually that it’s a scam.

However, if you really think your deal may be legit, the way to keep yourself safe is to ask a lot of questions. Have the people you are investing with explain every single detail of the business behind the scheme. If there is something you do not understand or are confused about, do not invest unless you get a satisfactory answer. Many scammers rely upon the fact that their victims do not understand business jargon and thus are able to get away with scams by simply throwing complicated terms at investors. Many potential investors are intimidated and do not want to admit their lack of knowledge, while others are simply so eager to cash in that they avoid obvious questions they should be asking.

Another great example of a scam that’s too good to be true is the Nigerian email scam. It seems that almost everyone has heard of this type of scam, yet people are still falling for them. In this type of scam you receive an email from someone, usually from Nigeria, who has a huge amount of money and needs your help to move it out of their country. In return for the use of your bank account, this person will give you a percentage of the money. Usually these emails are written in awkward English, filled with misspellings and are simply too good to be true. Here’s an easy way to avoid this type of scam – just know that it will never be for real. Why would a perfect stranger want to share their money with you? How did they get your contact info? And do you really think it’s a good idea to hand over your bank account information to a random person? If you think the answer to that third question is yes, then you probably deserve to be scammed.

Katie Richards writes for a financial website based in Vancouver. They specialize in information about life insurance products for Canadians.