If you answer the question “are you at risk of being scammed?” with a “yes”, good for you!  By recognizing your vulnerability, hopefully you will be a harder target.

If you answered “no”?  Well… keep reading.

Anyone Can Fall For a Scam (and Does)

If you think it’s only the elderly who get scammed, you’re wrong.  A report by the Federal Trade Commission found that among those aged 20-29, a whopping 40% reported a fraud loss compared to only 20% or fewer among those in their 60s, 70s, or 80s.

Sadly, the financial losses reported by older people were significantly higher, especially among those aged 80 or more.  Even so, the data makes clear youth doesn’t make someone immune to scammers.

Among victims of online scams, this study by AARP of people aged 18 years and older identified several common characteristics, such as: feeling isolated or lonely, job loss, money worries, and struggling with debt.  These situations could happen to anyone, no matter their age, sex or education level.

Another cheery read is this report by the Better Business Bureau that looked specifically at romance scams (warning: it could turn you off online dating forever).  When it came to identifying who was likely to be a victim of such a scam, this was the conclusion:

This type of fraud can and does affect men as well as women, younger as well as those older, and gays and lesbians as well as heterosexuals. The one thing victims had in common was a strong belief in true love and the existence of a soul mate … and they believed that they had found that.

How You Can Avoid Being Scammed

I’m under no illusions that these tips will help you avoid every scam out there. Scammers are successful because they study human behavior and perfect how to persuade us to act a certain way.

These tips may, however, make you a less-appealing target and result in the scammer moving on to someone else.

1. Be a Skeptic

I doubt this is brand new information but it bears repeating: if it sounds too good to be true, it probably is.

Something that guarantees above market returns is likely either a scam or so extraordinarily risky that you have a better than 50% chance you’ll never see your money again.  Either way, if you can’t afford to lose that money, just say no.

2. Ask How the Person Approaching You Makes Money

Creepy looking sales guy Money Scams and Scammers

You’ve probably heard the saying “there’s no such thing as a free lunch,” right?  It means that if someone is giving something of value to you, it’s because they believe they will get something of value from you in return.

This expectation isn’t a bad thing, necessarily.  In fact, it’s the foundation of the marketplace.

The problem is when the exchange lacks transparency or is lopsided (e.g., you get a meal, they get thousands of dollars in commissions).  Avoid this by asking up front about costs, what you’ll get in return, and what happens if you aren’t satisfied with the transaction.

I can’t promise you the conversation won’t be uncomfortable, but you work hard for your money and you owe it to yourself to be savvy with how you spend it.  And, if you don’t get satisfactory answers?  Walk away.

3. Do Your Due Diligence

I don’t think it’s ever been easier to verify something than it is today.  Type a name, phone number, or any other information you have into your favorite search engine and you are going to learn a lot.  Not finding information may also be a red flag.

For example, a friend of mine was approached by a company that told her they could get her out of her timeshare.  She asked me if I thought it was legitimate so I immediately Googled the company name and could only find one mention of it on the entire internet.

It was a positive review but I thought it so strange that there was only one reference to it online that I advised her to get more information before she moved forward.  So, she asked for testimonials from previous clients.  She never heard from the company again.  A small investment of time saved her a lot of money.

My Past Regrets

I can’t recall ever being scammed in the traditional sense but I can think of at least two instances in my past where a too-trusting me let someone separate me from my money and/or waste my time.

My One Brush with an MLM

The first happened when I was newly out of college and got drawn into a sales pitch for a multi-level marketing scheme (fortunately, all I wasted with this one was my time).  It happened because I was desperate for a better-paying job and saw an ad in the paper (yes, I’m that old) that intrigued me.

The ad said the position would be “supporting the environment” but I honestly cannot recall the product that was being sold or how it was related to the environment.

What I do remember is observing the guy who’d walked into the room ahead of me look around, quickly suss out the situation, and then turn to the person who greeted us and ask where the bathroom was.  She pointed the way and he left, never to return.

I sat through the presentation in awe of that guy.

I wanted more than anything to not be in that room but I couldn’t think of a polite way to leave.  How had he known at a glance that this was not worth his time and a discreet way to get the hell out of there?

The lesson I learned that day from him was probably worth sitting through the 90 minute presentation. But only just.  (First aside: if this happened today, I would just walk out and not worry about being rude.)

The “Financial Advisor” Who Didn’t Know Much about Finances

My second regret has to do with a “financial advisor” I worked with in 2006 (and this one did cost me money—I estimate $3,500, which, had it remained invested, would be worth a lot more than that today).

She was an employee of one of the big financial services firms that still exist today.  I had gotten her name from a friend and she seemed very personable.  But not only were her recommendations for what to do with the small amount of money I had to invest—around $28,000—in her best interest and not mine, it turned out she knew way less about finances than even I did at the time.

First, she pushed me toward “load” mutual funds.  Because of Suze Orman, I knew that load funds charge a sales commission up front to buy shares whereas no-load funds do not.  This knowledge made me hesitate, but I thought if the funds were particularly good, paying a small fee up front might be worthwhile.

So I asked her and she assured me they were good funds.  After the purchase, I remember looking at my statement with alarm because the balance was so much smaller.  I still trusted her, however.  Then came the meeting where I realized how little she actually knew about finances.

I had given her a copy of my paycheck (I still can’t believe I did that!), and she had called me in to talk about disability insurance.  She said she’d noticed I was paying money every paycheck to “OASDI” and that she thought her company offered a product that would be a better option.

I think she quickly figured out by the stunned expression on my face that she had said something stupid.

OASDI stands for Old Age, Survivors, and Disability Insurance which is the official name for Social Security.  With very few exceptions, everyone who is employed in the U.S. is mandated to pay OASDI.  I do not fall into one of those exceptions.  Neither, for that matter, did she.  For her to make that suggestion meant that my “financial advisor” knew less about money than I did at age 15 after I had gotten my first paycheck.

I don’t count this as a scam because what happened to me is what happens to anyone who works with a financial advisor who is not a fee-only advisor.  They make money by selling you products for which they earn a commission.  I got a few hours of her time and in return she received thousands of dollars of my money.  Good for her, not so good for me.

There was one additional benefit for me, although it took me a few months to identify it: the experience gave me a big confidence boost that I could manage my money on my own.  It was a tough lesson to learn but it was a good one.  (Second aside: I can’t think of a single reason why anyone should buy load funds so if you are offered them, please get a second opinion.)

What Worries Me Most

Looking ahead, scams still worry me.  Right now, I think I’m suspicious enough not to get taken in but what will happen in my later years, especially if I slip a little mentally?

A friend of mine who has a mother with Alzheimer’s has shared some of the safeguards her family has put in place to protect her mother from the scammers who call and ask for money (my friend has no idea how they know to target her mom but they do).

The first is ensuring that her mom only has access to one credit card with a very low limit and that every time there is a charge both she and her brother are notified. The second was taking away her mother’s checkbook and filing the necessary paperwork with the bank so they know her mom can’t make decisions without her or her brother being consulted.

These are great but I don’t have family who can step in like my friend has stepped in for her mom (and even if I did, sadly, the fact someone is family doesn’t mean they won’t try to scam you out of your money).

I haven’t solved this problem yet but it is in on my radar.  Hopefully, I will stay sharp until I die and it won’t be an issue, but there are no guarantees in life.

What Are You Doing to Reduce Your Risk of Being Scammed?

There are lots of people out there trying to separate you from your money, and lots of ways for them to do it.

I feel like I’ve put some good safeguards in place right now—most notably a healthy dose of skepticism for get-rich-quick schemes.  But what happens when I’m older and perhaps not as clear-thinking?

I’d love to hear what you’re doing.  Let me know in the comment section below!

Woman holding a cell phone Scams Money Scammers

Are You at Risk of Being Scammed?

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