Scams

From dis-Emi-A

This is a working page which I will sometime transform into a scam awareness page (which by the nature of scams must also be a financial awareness site). This will mainly focus on non-minute scams at the moment (minute scams being in the range of value up to around a few hundred euros) -- the rules are very similar but some items are more relaxed.

Separation

Even after a few points it seems clear that I will need to split this into a few different categories (otherwise it will get confusing/complicated).

Financial 

the investment of money for the sake of making more money

Utility 

the investment of money for the purpose of acquiring goods/services

Warning Flags

This is a list of items which are indications of a scam. They are either a red flag (for clear indication) or a yellow flag (for possible indication).

(Red Flag) Cash transaction 

No significant offer would require that cash be the only manner of payment. Furthermore, for transactions involving regulated exchanges (stocks, bonds, fonds) or deeds (land, cars), the mere allowance of cash is a red flag for a scam.

(Red Flag) Secrecy 

The requirement for any aspect of the deal to be held in confidence is a sure sign there is something fishy with the deal. All proposals should be open for scrutiny by your partner, friends, banker, store clerk, attorney, or whomever else you may choose.

(Yellow Flag) Immediacy / One-Time 

Things that need to be done quickly, or in a short time, are quite suspect. The length of reasonably time on which to act on an offer should generally be in lines with the size of the offer. Additionally, one-time, or once-in-a-lifetime offers are also suspect. The offers from an institute (perhaps a bank), may change superficially from month to month (including the name) but they will continue to provide very similar offers for a long time.

(Red Flag) No Lawyer 

All banks, brokerages, department stores, chain stores, catalogs,

and any corporation has at legal firm or team of lawyers tending to the legal aspects of their transactions. Those lawyers and firms are registered with a government body (oft named the "bar association). While this information is not usually presented by the salesman, it is oft written on broschures and must be made available upon request. The unwillingness to give such information is a clear sign of a scam.

(Red Flag) Excessive Returns 

A long term projection of more than 10% return per year is nonsense. While sometimes investments do yield such numbers they are high-risk items which do not have a long-term performance anywhere near that number. High-risk investments that aren't scams will often yield in the 5-10% range. Low-risk investments and guaranteed investments will typically not yield more than 4%.

(Yellow Flag) Release forms 

Financial instruments are heavily regulated and provide limitations and obligations on the part of the buyer and seller. The need to sign a release form, or a large indemnity section on a purchase form, is usually a sign of a questionable investment. Most things can be purchased simply by signing an authorization of payment form (which indicates what you are buying and how much it costs).

(Yellow Flag) Prizes / Special Selection 

Statistically you will win (receive free) little to nothing of value in your life. Any implication that you have somehow been specially selected for an offer is a warning that something isn't right.

(Yellow Flag) Foreign Office / Activity 

Investing in an firm / activity outside of your own country means your options for recourse against the company are limited.