10 Best Frauds of All Time: How to Spot Them

Jean Scheid
Categories : Personal finance ,Finances
Tags : Money personal finance topics cost living

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1. Fool’s Gold

Perform an Internet search on secret gold maps and unfortunately you’ll find those preying on the needy (and possibly greedy). From books to maps to places to find, buy or sell gold, one of the best frauds of all time includes fool’s gold and ways to cheat unsuspecting buyers and sellers out of their gold. Never fall for these scams. If you really want to be a gold miner, you’ll need hundreds of thousands to invest in machinery, a crew, and permission to dig on someone’s property or buy your own gold-ridden piece of land—but sellers of these types of properties often place tidbits of gold around only to sucker you in. If you have gold to sell or invest in gold, find a reputable jeweler or investor who specializes in these areas.

2. The Ponzi Scheme

Charles Ponzi

If you’ve never heard of Bernie Madoff then count your blessings. Most likely king of the Ponzi scheme, Madoff gained billions from investors who counted on a good return on that investment. If someone wanted out, no problem, Bernie relied on more cash coming in from his trusted investors to pay off the restless and used most of the money to live an elaborate (and expensive) lifestyle. The downfall to Ponzi schemes comes when all investors want their money back and you guessed it, it’s already been spent by the Ponzier. Before you invest in stocks or bonds or promises or riches, do some research or find a reliable investment company.

3. Sports Memorabilia

Babe Ruth

If you really want that Peyton Manning NFL signed football, how do you know the signature is really Peyton’s? Even forgers can buy certificates of authenticity (COAs) or make their own. Some of the largest sports memorabilia fraud (Operation Bullpen) was investigated by the FBI, where forgers made millions from forging signatures of Babe Ruth, Ty Cobb and even Michael Jordan. According to Sports Memorabilia, many sellers of these desired sports pieces are adding a “numbered, tamper-proof holographic seal to their products,” and offering “100 percent lifetime guarantees.” If one finds a sports memorabilia piece to be fraudulent, the dealer promises their money back—in full.

4. Mortgage Fraud

Mortgage Fraud

Even the Federal Bureau of Investigation (FBI) realizes how rampant mortgage fraud can be so it also lands on our top ten list of best frauds of all times. House stealing and reverse mortgage fraud catches the unsuspected off guard via e-mails, mailers, and even shell-house companies offering up the best deals leaving homeowners homeless. Visit the FBI’s webpage to learn more on avoiding mortgage fraud, how to spot it and ways to avoid it.

5. Medicare Fraud

Medicare Fraud

The experts at Medicare.gov say the amount of Medicare fraud is hard to determine. Medicare fraud is where doctor or health care professionals bill Medicare for services never received—and get paid. There are also those who use each other’s Medicare cards to receive healthcare for free and insurance companies that promise they have a pre-approved prescription Medicare plan that’s not approved by Medicare. You can learn more about Medicare fraud and even report fraud on the government’s website.

6. Take Me to Egypt

Gizah Pyramids

The Pyramids of Gizah would be awesome to see, however a pyramid scheme is not something to fall for; and they are hard to detect these days, especially with the rise of the World Wide Web. Pyramid schemes work a little differently than Ponzi schemes in that they recruit people to sell a product and make money by doing so. It’s hard to spot a pyramid scheme; however, the Federal Trade Commission (FTC) says a sure way to spot one is via “lack of retail sales” and “inventory loading.” Inventory loading is where new recruits are required to purchase large amounts of inventory they will probably never sell with all the profits going to the higher ups in the pyramid. If one is promised the product is selling like wild fires and upon research, it’s revealed the only people buying the product are those inside the pyramid then this is known as lack of retail sales. If it sounds too good to be true, it probably is so don’t buy in unless you investigate the company.

Please continue to Page 2 for mone on our top ten list of best frauds of all time.

7. Bait & Switch

Bait and Switch

This fraud has been in existence since retailers found venues to advertisein, be it radio, newspapers, television or the Internet. The consumer is promised via advertisement to receive a desired product at a guaranteed low price but once they arrive at the retailer, they find no such item at that low price; however, the retailer leads them to a “similar” item with a higher price. Or, retailers are known to tell arriving consumers that they just sold the last one but they’d be glad to sell you something else—at a higher price. This is illegal and honest low sale items advertised will have disclaimers (even if you can’t read them without a magnifying glass) to ensure they have enough, or a limited amount of the low cost product for sale. If you find yourself victim to a bait and switch scheme, report it to your state’s Attorney General’s Office.

8. Make Money Online!

Make Money Online

From franchises to starting your own online business and everything in between, Internet make money schemes also land on our list of the top ten best frauds of all time. The wannabe entrepreneur invests money upfront and receives nothing as promised, or only receives an idea in a pamphlet-like offering or a DVD telling them how to get rich—usually providing not much information of value. While there are many legitimate affiliate marketing avenues you can follow, some are pure schemes where the only ones making money are at the top. Bright Hub offers up some legitimate make money online opportunities and before you invest find out if the company has any Better Business Bureau or government complaints against it before you lose valued hard earned money.

9. Movie Investing

Movie Investing

Investing in a movie can be a profitable avenue to make money—it can also be a devastating scheme. Reputable movie investment companies or producers will take your money, offer up a prospectus or legal entity you become part of and send you constant reports on the stages of production. At the start of filming (or once the movie has been totally funded) the investor can choose to get their money back plus 10 to 20 percent or hang in there and see if the movie is profitable. Either way, the investor does get at least their original investment back. Non-reputable movie investment firms will take your money, bundle it in a large sum (keeping some to make a profit) without adequate records, offer the rest of the money to the movie maker and get out of town. Hence, the real movie maker has no idea who you are or how much you invested. Only invest in films or companies that you investigate fully and those that provide adequate record-keeping methods, a prospectus and the ability for the investor to call and inquire about the status of their investment at any time—and one that provides a K-1 to all its investors.

10. Lottery E-Mail Scams

Lottery Scams

Ever receive an e-mail from someone in another country asking you to help them receive their lottery winnings with a promise to share in their luck? These mostly come from Nigeria and all you have to do is offer access to your bank account so the lottery winner can transfer the winnings into your account. The result is your bank account is suddenly empty and there’s no way to retrieve your money—because you allowed the access to occur. Never fall for these lottery winning e-mail scams—they are fraudulent pure and simple.

Protect Yourself

The sayings “let the buyer beware” and “if it sounds too good to be true” really mean something, especially in these days of Internet fraud and a bad economy where thieves find ways to make money in the most dishonest types of ways. Do research before you offer up any cash—for anything you feel might be a scam - and you won’t find yourself as a victim of one of these top 10 best frauds of all time.