Episode 14: How do I recognize scams?

People are out for your money - whether it's money you don't have or money you do, there are thousands of ways that people will try to take your money without actually giving you something in return. These are fraudulent schemes - which means that they're illegal - that try to trick you into paying or providing bank details, and then using those details to entrap you with various predatory actions, including but not limited to:

• Using your bank accounts to pay for stuff and draining them
• Using high-interest or predatory loans to steal your money
• Making you pay money for a product that doesn't exist, or is not the same as what was advertised
• Impersonating others so you'll transfer money to them
• Collecting and selling your data to companies that will utilize it

The word "scam" is often used to describe many financially or morally questionable things we find on the internet, but that aren't actually fraudulent. While these can be problems, financial scams are illegal, and often dangerous to your finances, your savings, your information and your mental health in a way that sometimes internet schemes are not.

If scams are illegal, how are they enforced?

Financial scams and other types of financial fraud - the catch-all legal term for trying to make money by tricking people or the government - are illegal, but aren't always prosecuted due to the sheer volume of them that exist. Often, it takes a minimum number of victims or minimum amount of money lost to a particular scammer in order to actually take a scam to court. It is also difficult to arrest scammers, as it requires the energy to track down and then lawfully locate scammers. For small-scale scams, while there may be complaint-boxes or websites available for you to make your case and receive redress for a scam, that is by no means universal.

Most of the scams you experience in your life won't be enforced. Depending on the strength of anti-scam infrastructure in your country, actually receiving damages for a scam can take a really, really long time, and it's better to prevent and act quickly if you have been scammed, but depending on the duration since the scam, the nature of the scam and other factors, it will change the likelihood of you getting your money back in time.

Suprisingly, one of the best ways to stay safe in case of a financial scam is to use a credit card to pay for online transactions or buys where you don't immediately get your product. This is because banks are much more concerned about credit cards than they are debit cards! While a debit card is your money, a credit card is their money. Additionally, while you might not be able to catch a scam in your debt, if your credit spending looks a little bit off, that can be a sign of a scam happening.

If the scam is online, you can typically report it to a server host - reporting sellers, leaving bad reviews, clicking "Report as Spam" on an email and much more.

There are various scams you can get yourself into, but we'll look at 4 broad categories today and talk about how you can avoid them - false goods/dupe scams, phishing and data mining scams, impostor scams, unintended consequence scams.

False Goods/Dupe Scams

This is a class of scams where you essentially pay for a good or a service that either doesn't exist or falls severely short of the quality you actually paid for. An example of this scam was the AI Crystal Mug on TikTok, where scammers posted AI images of crystal mugs and many people thought they were real.

These scams are typically for mid-range consumer goods, and are commonly found on shopping sites. Why? Well, it's much easier to scam you into buying a product when you can't see or feel it for yourself. Plus, in-person retail locations cost a lot of money to set up, and it's hard to run a significant false-goods or dupe scam when you're paying all the fixed costs of an in-person store. If a shirt that you bought from H&M falls apart after two washes, it's not actually a scam in the strictest sense of the word - it's just not the best quality of cl0thing for the $12 dollars you might have paid for it. But if you paid $40 dollars for a shirt and it fell apart after two washes, that would be considered a scam. Sometimes, you might pay money just for your goods to not actually arrive at all!

For False Goods scams, the best way to keep yourself safe financially is to conduct extensive checks before actually paying for a product you aren't physically taking home yourself. Often, a lot of this is down to reputation - if you're working with a large company, or one that's highly renowned in your area, you are most likely not going to get a false goods scam.

If you are going to buy something online, here are some methods you can use to check the legitimacy of a seller:

• Look at product reviews - if a product doesn't have any reviews, chances are that the seller isn't actually that reliable. Also look out for AI or bot reviews, that are typically 5-star ratings that don't make much sense
• Too good to be true? Probably is - if you see a product that seems to be selling extremely below market price, unless you're buying in bulk, chances are that the product isn't that solid. In the case of items like skincare, this can actually be detrimental to your health!
• Check for a warranty/return policy: If an item has a clear warranty or refund policy and it provides working contact details, there's less chances that the item is a scam
• Look for a refund plan: Some sites will automatically refund purchases you make that don't actually get sent to you. Try to stick to those sites

Beyond this, just look out for yourself and your money, and avoid any potential traps! Always stay vigilant of anything that looks too good to be true, or if something feels off about a site. Keep an eye on hidden fees like transactions and shipping, as they can also be a sign of fraud.

These scams can be very prominent even in-person in one very specific situation - vacations. When you go on a trip, chances are that you might buy a souvenir that falls apart, or an object for extremely overpriced. When buying, just ask yourself why you're buying something and the actual value it will have for you. It is much more impactful to spend on a handcraft in a historical village, than an ugly T-Shirt that you will almost always be uncharged for.

Phishing and Data Scams

These scams are insidious - they are essentially attempts in various ways to obtain your personal data and bank details, so that scammers can access your funds and then spend them over time. When such a scam happens through an email, it's called phishing.

Many of you think you already know what phishing looks like - a suspicious-looking email from an unknown-contact that has a clickbait headline like "$5000 dollar business opportunity" or being added to a WhatsApp group chat with 50 other people. These are often very obvious scams - general rule of advice, if you don't know somebody and weren't expecting communications from an unknown person, assume phishing. If you're on a secured account, like an organizational email, look for a domain name that matches the organization you're working with, and a username that matches that of your specific company.

However, a lot of phishing scams are highly targeted, involving in-depth research into you as a person and your life circumstances, then capitalizing on that. These scams are known as spear phishing - they can be extremely sophisticated and hard to recognize. To address spear phishing:

• Don't click on links in emails unless they're directly from an email address in your contacts, or part of your organization. These links can highly mimic typical websites, like your bank, and collect your information that way
• Keep spam filters on social media, search engines and your calls - if you have an upcoming contact outside of your network, initiate contact with that party and establish certain methods of recognition that work for you
• Try to directly visit websites from your search engine - avoid clicking on sponsored posts or posts with obscure domain names like a string of numbers and letters. If any popups show up, immediately click Command + Q

Impostor Scams

This category of scam really overlaps with others, but the easiest way to think about it is as scams where somebody pretends to be someone else in order to get money out of you. Just like an AmongUs imposter, these scammers are secretly killing your finances while pretending to be on your side. There are a few types of imposters, including:

• The scarers: These impostors will utilize fear to extort you - from pretending to be police officers or governmental bodies, to acting as loan sharks or even extortionists, these people will make you give up money out of fear
• The pity: Seen in both real life and the internet, these are individuals who will seek charity money, and then use them for nefarious purposes
• The close scam: This is when a scammer can impersonate someone close to home - like a friend, a family member or a coworker, and make reasonable requests for money that might seem normal
• The authority: These are scams that utilize the legit-ness of a financial authority, like your bank, to trick you into paying money for some nonexistent fee

There are hundreds of other imposter scams that have been caught and recognized - and even some that haven't! To stay safe from imposters, always double-check. If you're not sure about a request from a friend, your work, your bank, or anybody else, just look for their number independently, call them, and check what their response is. Often, people will care about your safety as their close one or consumer, and respect your propensity to actually check.

Unintended Consequence Scams

These types of scams are often the most dangerous and the most insidious. We can define them as financial decisions you make without being given all the facts. Commonly, these scams are less about what you buy and where you put your money, but instead about what you do and take money out for. Some examples of these scams include:

• Catfishing: You've 100% heard of this one - basically when someone pretends to have a romantic or sexual interest in you, but is revealed to have a completely different identity. Often will ask f0r loans, gifts or even extort for money
• Predatory Loans: These are loans that are given by unregulated lenders that will use extremely high interest rates to trap you in interest payments for the foreseeable future
• Multi-Level Marketing Schemes: These are companies that make revenue by having people oversubscribe to their marketing programs, without having genuine products with commissions. Often collapse, leaving many with a lack of job or savings
• False Business Opportunities: When somebody might offer you a business opportunity that doesn't exist, and use up your money instead
• Money-Mule: These are scams that use you as a conduit for money laundering and can involve random transfer requests or other strange asks
• Sweepstakes Scams: this is when you get a false message informing you about having won a large prize or lottery, when the prize doesn't exist

One of the biggest antidotes to Unintended Consequence scams is simply transparency. For every business opportunity, for every loan, or commissioned program, look for clarity in the terms and conditions, avoid opportunities where nobody can give you straight answers, and avoid any appeals on your emotions

Ultimately, the world is filled with dupes, scams and tricks - there are now thousands of people out there with the motivation and means to throw off your finances. But by being aware of scams and taking precautionary measures, you can insure that you keep your money safe.