Normally I don't have sympathy for people who are too greedy and lose their own money, it's their own damn fault. BUT a lot of these scams target seniors and the elderly, who may not be as savvy as us and as well may not be of sound mind. When they get scammed I wish nothing but the worst to the scammers.
You will always get scammers out there because there will always be fear and greed to feed off. It's a numbers game as well. Ask enough people and some will bite. And once you've reeled in one, you reel in their circles. Let's face it, you get some very sophisticated scammers as well. Madoff was a prime example. And when a smooth salesman is pitching an idea to someone that isn't very investment savvy you can see why people get into trouble.
Investment scams have been around as long as investment itself, and there will always be people who want o try and cheat the system and prey on those that aren't financially sensible. You only have to look online and there's get rich quick schemes all over the place. Common sense seems to leave people when they get promised fortunes for very little investment but I'm sure we all should know that schemes like that don't exist.
I came extremely close to falling victim to one such scam. It was a job offer scam in which the thief sent me a check to cash to purchase goods with. I was then to wire transfer the remaining money back to him. Needless to say, a few days later the check bounced. If I hadn't caught the scam early, then I would be left holding the bag. It can be puzzling as to why people will fall for these scams, but it is important to know that these people are extremely good at what they do. They know exactly how to lure in the types of people who will fall for these things. Take the classic Nigerian Prince Email scam as an example. Most people today are aware of this scam, and see anyone who falls for it as foolish. The truth is that these scammers made huge sums of money because they targeted their victims carefully. First, they intentionally included grammatical errors and inconsistencies in the email to immediately cause several people to realize the email isn't valid. This quickly narrowed their potential victims down to people who were more likely to fall for anything. Using these and similar tricks, scammers can target their ideal victims efficiently.
I recently got a phishing email from someone posing as an institution I'd done a little business with - the scammer was wanting me to "update my account info" and claimed that others had tried to get into my account from other locations. The thing was, I don't presently have an account at that institution... and the email also had obvious spelling and grammar errors that made it a no-brainer that it was coming from someone who uses English as a 2nd language, and who is not working for any legit institution. I reported them.
I've seen some very well done phishing scams, and from institutions that I might use, recently. No grammar, or spelling mistakes, and realistic looking e-mail addresses. A good rule of thumb would be if you were to use that institution call them directly if you did not request the info yourself.
Another thing I have noticed when it comes to the people who fall for investment scams is their easy trust on these scammers. It's so ironic how scrupulous they are when it comes to legit companies but when it comes to scammers, they just easily fall prey and entrust their hard-earned money. I have a friend who has fell for an investment scam which offered her an instant return of investment but when she was first offered a legitimate investment plan through insurance plans, she was so hesitant to entrust her money. Now all she could do is regret and cry over her lost money.
I want to tell you about a different kind of...scam. Not a scam by law, but something fishy anyway. I went to a seminar with Nik Halik 2 years ago, a seminar about personal finance, financial independence and so on. The ticket to this seminar was about 100 Euros, which was at that time half of the minimum salary in my country. Fortunately, I won a ticket there and didn't have to pay for it. Anyway, Nik comes and the first part of the seminar was some basic motivational stuff and why should we trust him, mainly because he's an astronaut and he's a high achiever and so on, but what frustrated me the most was the fact that the second part was nothing else than an elaborated sales pitch for his product, that was supposedly beating most of the Wall Street brokers. I was so pissed and so were a lot of other people. In my opinion, it was a total scam.
If a guy is pitching his performance, he should be able to provide verifiable evidence of such performance from reputable sources. And for above average performance to be meaningful, it should have occurred over a period of many years, through good times AND bad. If someone GUARANTEES double digit returns, they're a scammer. If someone says they've made much more than 10-12 percent over a period of many years, be very skeptical. Warren Buffett has averaged 20% over 50 years, and a handful of other geniuses have averaged a little higher over shorter periods of time. I don't think anyone on earth can say that they've averaged 50% over the last decade, for instance. Most successful investors will be fortunate to get upper single digit or very low double digit returns over the long haul. And there will be ups and downs during those years.
