It's an unfortunate side effect of the recession that it brings out the worst in the criminal fraternity, whether that's simple burglary - which unsurprisingly is on the up - or the rather more sophisticated world of personal finance scams. Most of the financial scams work because somebody gets your trust, and then your money. So how do you spot the con man?
The first warning sign is that you've been contacted out of the blue. Having your email junk filter turned on is a good start. You wouldn't reply to emails for some "pills" or "services", so be equally cautious if you get an offer that'll make you money from somebody you've never heard of before.If you get a surprise call offering you a fabulous investment opportunity - hang up. The trouble is that con men know this approach doesn't really work. They'll take the trouble to sound as if they're helping you. It'll maybe take them 3 or 4 calls before they get round to a sales pitch, by which time they've begun to get your trust. This is the dangerous moment. Beware.
If you've kept alert you're now well placed to spot the next bit; the dodgy sales pitch. A common pitch tries to sell you a share that's basically worthless or simply non existent. The chances are that even if it does exist you'll never have heard of it. That's really the point - the con man is trying to sell you something that's difficult for you to check up on. They'll maybe put you off guard by showing you information about how much the share price has gone up, or tell you that they've got some insider information, or compare the share with a legitimate share, which (obviously!) won't be doing as well.
How do these guys find you? It can be quite straightforward. If you already own shares your details will be public information, armed with is information a con man will play on your familiarity with shares.Another technique the scammer might use is to play on the low returns you might be getting from your savings at present. They might offer to invest £1000 for you and promise to pay back £500 interest in a year. This sounds a lot better than the few per cent you're getting from the bank. But, the chances are that the conman is sucking you and others into a scheme where they pay the interest to you from new money that's come in. At some point this arrangement, made infamous recently by Bernard Madoff, will collapse. Don't be tempted - the chances are that you'll be a loser.Most of the scams will be run from abroad, so don't assume that the local police or the Financial Services Authority can help.
To sum up;
- Beware of cold calls
- Have you heard of what's being sold?
- If it sounds too good it probably is!