December 5, 2016

Why do Scams Work?

Scams have become more sophisticated over recent years, but history suggests that people have always been susceptible to fraud – a point that is explored in more depth below.

 

In 1920, Charles Ponzi implemented a scam to deprive hundreds of people of their hard-earned money. The Ponzi scheme – effectively the first kind of pyramid scheme to prove successful in real life (earlier examples existed in literature) – demonstrated the capacity of one man to defraud countless others.

 

Proving the point, Victor Lustig managed to twice convince businessmen in Paris that he was selling the Eiffel Tower. Just five years after Ponzi began his scheme, Lustig fooled some of the brightest commercial minds in Europe.

 

It should come as little surprise, therefore, that many ordinary people today fall victim to scams, many of which target the elderly or involve complex technology.

 

Scams come in various forms. Some are easier to spot than others. Some involve relatively small amounts of cash, but all are potentially very damaging. Any person, no matter their age or acumen, can fall victim to a scam.

 

One of the most common types of scam targets people looking for the best deals on secured and unsecured personal loans. The admin fee scam refers to a charge applied by a broker who has been asked to find a loan for a customer.

 

Despite charging the admin fee, the fraudulent loans broker never intends to find a deal for the client, who will find himself both out of pocket and without a loan. This type of scam should be differentiated from legitimate brokers who charge a fee upon finding a loan.

 

Another popular scam pertains to the selling of gold coins. While gold is extremely valuable at the moment, some unscrupulous suppliers of coins are actually selling substandard products comprising very thin gold alloys and composite metals.

 

Despite purporting to be worth whatever the current market value of gold happens to be, such coins are essentially worthless.

 

Some scams are less easy to spot, especially those relying on the use of sophisticated technology to confuse or trick unsuspecting computer users. Phishing scams, for example, are often successful because people fail to realize in time that they are being scammed.

 

A phishing scam is one in which a person is usually sent an e-mail containing a link to their bank account (or some other service). At least, that is what the fraudsters want people to believe.

 

The links actually direct users to spoofed or replicated versions of the target website. Once the user enters his or her bank details, the information is captured and stolen – leaving the scammers free to do as they choose with the login data.

 

Unfortunately, not all fraudsters have evolved with the times. Thousands of doorstep scam artists continue to plague unsuspecting people in their homes.

 

Often targeting vulnerable members of society, such as the elderly or disabled, fraudsters often apply strong-arm tactics to force the sale of a product or service.

 

Rogue traders might even start work on, say, building a new exterior wall, before demanding extra payment before completion. Some fraudsters do not finish the work or even start a job after a deposit has been paid by the customer.

 

In summary, people sometimes fall victim to scams. Some types of fraud are highly sophisticated and many are convincing, which is why people who have been conned out of money ought not to feel ashamed. Being aware of fraud and looking out for any signs of deception or trickery are the first steps towards defeating crime of this nature.

 

Article provided by MoneySupermarket.com, click here for a comparison of loans and other types of credit-building finance.

 

Leave a Comment

*