5 Major Frauds and Tips to avoid them

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Fraudsters devise scams to defraud you. Smart fraudsters have been targeting people of all origins, ages, and economic levels using carefully thought out ways, despite greater awareness and use of technology. These deceive you by appearing to be genuine, catching you off guard and assaulting you when you least expect it.

5 Ways Fraudsters take your Money using your Emotions

  1. Fear of Missing Out
  2. Close relationship with the scammer or another investor
  3. Peer Pressure
  4. Free Advice
  5. Telephone/Internet imposters

6 Money-Laundering Scams Prompted by your Emotional

1. Fraudulent Affinity

Victims are typically members of a community or close-knit ethnic, socioeconomic, religious, or religious organisations. The con artist finds a way inside this group and promises the captive audience investment alternatives with high or safe returns. He only needs to persuade the leader or an influential member.

How to Avoid: Control your emotions

Always do your homework on a company and product before parting with your hard-earned money, no matter how close you are to them or how trustworthy they appear. The investment must be appropriate for your stage of life. Don’t invest just because the individual appears kind or is someone you know.

2. Investing on the Internet

The fraudster writes e-mails posing as an official from a reputable private bank, insurance firm, or mutual fund company. He can also advise you on moving money to a better account, fund, or policy, or even provide you the maturity funds from your own policy. The deception is complete after he wants an upfront charge to effectuate the deal.

How to Avoid: Unsolicited mail should be avoided

Make it a point not to reply to unsolicited letters proposing fantastic investments, no matter how intimidating the sender’s position or how authoritative the letter’s tone may be. Call the bank or insurance to check the validity of the mail before complying to the mailer’s demands. Finally, never transfer money or fees to an unknown person or account.

3. Pumping and Dumping

One type of market-related fraud is ‘pump and dump,’ in which fraudsters artificially boost the price of a stock in order to pique investors’ interest. They then sell their shares at the inflated price, profit handsomely, and quit hype-mongering the stock. The stock price plummets, causing investors to lose money.

How to Avoid: Don’t be rushed or worried

Regardless of how rare an investment product is or how limited the time frame for investing in it is, never hurry into a deal. Examine the company’s history, the track record of its owners, the stock’s performance, and the rationale for the significant increase in share price. Don’t invest simply because others are.

4. Product Misrepresentation

Insurance is marketed to unwary consumers, mainly older folks, who are searching for an investment vehicle to park their life’s savings, and banks are a fertile field for such frauds. Endowment or money-back plans, as well as Ulips, are marketed to customers who don’t require life insurance and receive very modest returns.

How to Avoid: Start by identifying your requirements

Any investment product marketed by a bank employee should be avoided. Friends, coworkers, family, or anybody who is not an expert in the subject should not be trusted with your money. Seek the help of a financial adviser if you are unable to perform extensive study on your own.

5. Ponzi or Pyramid Schemes Are Financial Scams

The Ponzi scheme, named after fraudster Charles Ponzi, is one of the oldest investment schemes. It promises large profits and relies on new participants to keep the scheme running. If the recruiting stops, the payouts stop coming in, then investors lose money.

How to Avoid: Never follow the crowd

Avoid any plan that asks you to recruit others in order to benefit. The absence of any physical product or service that generates revenue is a major red sign. Do not invest if you cannot find any. Don’t put money in just because everyone else is.

4 Steps to Take after Discovering Fraud

1. Do not pay any Additional Money

This may seem self-evident, but certain schemes rely on the promise of high returns to entice victims to submit charge after fee, even when they feel something is wrong. In recent months, online fee fraud has increased considerably.

2. Gather the necessary Information and Documents

Create a timeline and gather papers and information that will help you report or investigate the fraud while the events are still fresh in your mind. Make a list of the discussions you had with the con artists, including approximate dates and times.

3. Keep your Accounts and Identity Safe

Take the required steps to limit access to your accounts and protect yourself from identity theft if you gave the scammers your payment information.

4. Notify authorities of the Fraud

If you’ve been the victim of other sorts of fraud and aren’t sure where to file a complaint, the Department of Justice has a list of resources that can help. Additionally, because federal agencies collaborate closely, your complaint will be forwarded to the proper agency.