4 Signs of a Financial Scam

It happens to even the best of us.

There are plenty of reasons you might get scammed. Scammers are good at what they do, so the deal might look legit. Greed has a funny way of clouding our judgement. And sometimes we’re just busy and let our guard down.

Here are four major warning signs of a potential financial scam.

1. Unsolicited contact

The Nigerian prince email scam has been around as long as the internet itself. It doesn’t get retired because it still works. If you send an email out to 100 million people and 0.01% respond, you still have 10,000 leads. The law of large numbers is funny that way.

My advice is to look at any unsolicited email as a potential scam. That’s not to say you shouldn’t respond to any uninvited messages in your inbox. Just look at things skeptically. Why is this person emailing me? Why are they giving me such a generous offer? Most of the time, people aren’t contacting you to do you a favor. That’s not how human nature works.

And remember, uninvited links in unsolicited emails are usually bad news. Don’t click on them, ever, especially if they’re from what appears to be your bank or credit card company. There’s a good chance someone is trying to get your sensitive information.

2. Seems too good to be true

Imagine if somebody contacted you with an offer. Each month, they could get you 1% on your money. This translates to 12% per year, just like clockwork.

That’s exactly the offer noted fraudster Bernie Madoff made to his clients. And for years, he actually delivered. Many of his more sophisticated clients were left scratching their heads. They knew returns were volatile. How could he offer something so consistent?

Most of his clients chose to ignore the warning signs, which ultimately led to them collectively losing billions of dollars. It all could have been avoided by realizing that if something seems too good to be true, chances are it is a financial scam. It’s easier said than done sometimes, but put aside your emotions and try to think about any potential opportunity logically.

3. Job scams

Often, potential employers are just scam artists posing as someone more legitimate.

Probably the biggest red flag is if an employer wants you to spend any money to get a job. This might be in the form of a course you’re required to take, or as an “insurance fee” for equipment you’re forced to rent.
These types of jobs usually promise enough of a salary to more than make up for any of these small expenses.

Before even accepting an interview, take a little time to research the company and the person emailing you. Is it from a business email, or one ending in gmail or hotmail? Is the ad riddled with typos? Are they contacting you at odd hours? These are all potential signs of a job scam.

4. Lack of information

Scams are usually heavy on promises and lacking in details. Simply looking past the headline and spending some time thinking about the fine print are great methods of identifying a financial scam.

Scams always fall apart in the details. Scammers know this as well as you do Enough people will be enticed by the promise that they won’t even get to the problems with the deal.

Asking questions will stop many scammers in their tracks. They know that the more you ask, the fewer answers they have. Often, scammers don’t bother answering questions anyway. They focus their attention on somebody who’s far more enthusiastic.

Ultimately, developing a more skeptical attitude will help you avoid being the target of scammers. Unfortunately, there isn’t a nice prince somewhere over in Africa waiting to give you millions.