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VARIOUS SCAMS

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THERE'S A SUCKER BORN EVERY MINUTE

Yes, that's right - there really is a sucker born every minute, actually more like every millisecond, but it is disillusioning to find that the world is crammed with idiots who fall for any line of baloney handed to them and happily part with hard-earned money for the most hare-brained or obviously crooked ploys. Wherever there are suckers, there are human piranhas just waiting to feed on them. Here are the top ten scams in Australia and advice on how to avoid getting conned.

  1. Advance fees and upfront payment - TIP: Never send money or give credit card or bank account details to anyone you do not know and trust.

  2. Money transfer services - TIP: Never send money by money transfer services such as Western Union or MoneyGram because once you send money, it cannot be recovered if there is a mistake made or it is sent to fraudsters.

  3. Online auction and shopping - TIP: Shop around and do your research - beware of excessively low prices.

  4. Computer hacking - TIP: Never give an unsolicited caller remote access to your computer.

  5. Lottery and sweepstakes - TIP: It is impossible for you to win a lottery you didn't enter.

  6. Unexpected prizes - TIP: Do not send any money or pay any fee to claim a prize.

  7. False billing - TIP: Make sure the business billing you is the one you normally deal with.

  8. Banking, tax and online account - TIP: Protect your details - a bank, tax office or legitimate business will not email you out of the blue asking for account details, credit card numbers or online user names and passwords.

  9. Jobs and employment - TIP: Beware of job offers that require you to pay an upfront fee or require you to transfer money for someone.

  10. Dating and romance services - TIP: Scammers post fake profiles on dating sites. If you meet someone online and they profess their love very quickly then start asking you for money or gifts, run the other way.

  11. Computer prediction software - TIP: Be wary of investments promising a high return with little or no risk.

With very few exceptions, scammers and conmen are usually intelligent and resourceful. They know how to push the right buttons on their victims and use all sorts of tricks and social engineering to get their targets to let down their guard and fall for their scams. The most prevalent scams are seen on the Internet, but here are some interesting examples of non-Internet based swindles.

INVESTMENT SEMINARS

Most investment seminars are nothing more than thinly disguised vehicles to sell training courses or financial services. Many of them are operated by slick spruikers who claim to have made many millions of dollars from fancy share trading methods or investing in amazingly high-return mines in some third-world nations and now they want to impart this valuable information to others, because they claim that they like to see these people have similar success.

However, when one examines the facts, one invariably finds that these slick spruikers actually have not made money from astute investments or their claimed methods, but are making their living from selling their training courses or financial services and don't guarantee that people who enrol into these courses or use their services make a cent. Some of these companies actually will refund the cost of the courses if somebody makes enough noise about it, but in most cases, the victims simply write off their losses and go away, leaving the spruikers to tout for more suckers.

I went to one of these alleged investment seminars to see how it worked. Sitting in the function room in a fancy hotel, I watched in amazement as a slick American dripping with gold jewellery bounded into the room and started showing how trading in options and other Contract For Difference (CFD) on the stock exchange was almost guaranteed to make us all rich as hell. Graphs and testimonials appeared on the screen, with glowing praise from people who allegedly became multi-millionaires through learning how to trade these devices using the methods spruiked by this slick American.

This American even passed around a lovely solid gold Rolex watch for us to drool over and showed us photos of his alleged multitude of properties in the USA, all apparently acquired from his options trading. At the conclusion of his pitch, he very cleverly started to separate the suckers from the cynics by telling the audience that the people who wished for success should go to the back of the room and part with around $4000 each for the training course and the losers should stay in their seats. Of course the audience members didn't want to look like losers to the rest of the crowd, so they went to the girls manning the sales desks and swiped their credit cards and signed up.

I decided that the only way I was really going to learn about this scam was to participate, so after I received an ironclad guarantee of a refund if I returned the training material, I signed up too. Then I took the stuff home and had a good look at it and discovered that in most cases, trading options and CFDs in these ways would most probably bankrupt me in very short order. I then did some Internet searches on the slick American spruiker and found that he was nothing more than a salesman for the company and his income derived not from his options trading, but from his job selling the dream of easy money to suckers.

Needless to say, I then went to the company's Australian headquarters and demanded a refund for this training course, which they gave most reluctantly. I also researched other similar free investment seminars and found that most of them worked the same way, with spruikers selling the illusion of wealth and security by claiming to have made fortunes by using the techniques in the courses, but in reality were nothing more than salesmen selling mostly worthless training courses with no guarantees of success. These free investment seminars are not worth attending, but if people wish to learn about stock and derivative trading, the Australian Securities and Exchange (ASX) has excellent free courses running all the time.

PRIVATE SALES SCAM

This particular swindle should be called the Gumtree Scam because it seems that most people who are targeted have advertised goods for sale on the popular Gumtree free selling website. This is how it works, using a car as an example of the item for sale.

After a seller advertises the car on Gumtree, he will receive an email from somebody who agrees to buy the car. What is interesting is that the swindler usually does not even bother haggling the price like most shoppers, but agrees to pay whatever price the seller is asking. The swindler will say that he is in a different state or working in a remote place where there is no phone service, so email is the only means of contact and of course the swindler's email address is a free Hotmail or Gmail account. The swindler says that he will transfer the money via PayPal to the seller's bank account in full.

After the seller agrees to the terms, the swindler will inform him that the car needs to be transported to another state, but the swindler will pay the transport fee, usually two or three thousand dollars that will be added to the price of the car, but the seller will have to pay the "private courier" by Western Union irrevocable money transfer and that the courier's head office is in China, Nigeria or another nation.

The seller will then receive an email purporting to be from PayPal, stating that the payment for the car plus the "courier" has been made. But the payment has come from somebody's compromised bank or email account for which the swindler has the log-on details. He transfers the money from that persons account to the seller's account and then asks that the seller transfers the "courier" fee by Western Union and that is the basis of this scam, to get the seller to send money to the swindler. But what about the money that the swindler has transferred by Paypal or even direct bank deposit?

The transfer will be noticed by the legitimate owner of the compromised account and will be reversed by PaytPal or the bank and reclaimed from the seller's account after a fraud investigation. So the result is that the seller has been scammed out of the money that he sent by Western Union and of course that transaction is irreversible. The swindle is essentially a variation of the infamous Nigerian advance fee scam. The above description is one variation of the scam, but swindlers use a number of different measures to achieve the same result, which is extracting money from gullible people.

CREDIT CARD SKIMMING

There are various forms of this scam, but they all rely on obtaining the data from the magnetic strip on the victim's credit card, the security code on the back of the card and hopefully the secret Personal Identification Number (PIN). This is done in a variety of ways.

One method is where scammers will affix a fake card reader over the real card slot of an ATM, as well as a miniature hidden camera, so when the victim inserts his card, the data on the magnetic strip is read and the hidden camera records the keystrokes when the victim enters his PIN. The scammers can then immediately clone the credit card and with the PIN, they can immediately access the victim's bank account and clean it out, even going from branch to branch with that cloned card.

Another way is for unscrupulous cashiers in petrol stations and restaurants to take a customer's card in order to pay the bill and merely swipe it through their own pocket card reader and note the security number on the back of the card. Even without a card reader, they can take a note of the cardholder's name, card number, security code and then use that information to purchase goods on the Internet, because all an on-line store needs to make a sale is the cardholder's name, card number and security code. Usually by the time the victim checks his credit card statement and finds that an unauthorised purchase has been made, it is too late.

Fortunately, most banks will indemnify their customers against fraudulent use of their credit cards in this manner, provided that the customers have not disclosed their PINs to anybody. However, the real problem is if the crooks get away with this, they are encouraged to keep skimming credit cards and as for the clients whose cards have been fraudulently misused, they are put to the inconvenience of cancelling their cards and getting new ones and also having to contact all the businesses who debit those cards automatically and reset all the details.

MONEY EXCHANGE SCAM

The victim is told that for every $5 invested in a money exchange scheme, the lucky speculator will earn $58 - an absolutely guaranteed way of becoming a multi-millionaire overnight. For the secret of this amazing method to become instantly rich, the promoters are asking a measly $198 from each investor. Now why on earth would they ask people for such a paltry sum of money if they actually had the secret of instant wealth? The obvious answer is that the promoters only know how to make money one way, and that is to persuade gullible fools to part with $198 each.

RINGTONE SCAM

Often people accept free or low-cost ringtones for their mobile phones, but they may come with hidden strings attached. In many cases, accepting these offers involves subscribing to a service that keeps sending ringtones to the users for exorbitant sums of money. These offers should be avoided at all costs.

Most modern mobile phones will play any MP3 file as a ringtone. The quickest way to get the ringtone you want is to edit the track you want as a ringtone in a wave recorder program and save it as a MP3 and just download it to your phone and make it the ringtone. It's that simple and it's completely free.

MIRACLE CURE SCAMS

Snake oil salesmen have been around since the dawn of man and in the modern era, they have found a lucrative outlet for their phoney wares on the Internet. People have to realise that there is no such thing as a miracle and there are no miracle cures for anything. So if a product claims to cure cancer, diabetes or any such ailment, treat it with contempt. The same goes for weight loss potions that promise amazing results, but unfortunately there is no product that does this.

One of the most prevalent scams is the online pharmacy that purports to sell Viagra and other sex-enhancing drugs. In most cases, if a user sends money and actually gets something back, the drug is usually counterfeit and does not work. The same goes for all those allegedly amazing penis enlargers or drugs that claim to add inches to a man's penis that are touted in emails. They simply don't work. The only thing that will make a penis bigger is a magnifying glass.

PSYCHICS AND CLAIRVOYANTS

US magician James Randi has placed $1 million in escrow for anybody who can prove that they have supernatural powers or psychic ability. Thousands have been tested by Randi and not one of the professed psychics and clairvoyants could demonstrate any supernatural powers. In fact, most of the big-time psychics who have their own TV shows bolt every time Randi turns up to any of their shows, because he has this habit of exposing their cold-reading tricks and outright scams to their audiences.

The truth is that nobody is psychic or clairvoyant and these scammers use some pretty simple tricks to convince their victims that they can actually predict the future or forecast lottery winnings or similar amazing feats. One always has to wonder that if these alleged psychics have these amazing powers, why don't they win the lottery every week, but prefer to scam gullible fools on premium psychic phone services or tarot card readings. The same goes for astrologers, another bogus branch of the psychic scam.

DATING AND ROMANCE SCAMS

It is a sad indictment on society that so many people are lonely and lovelorn are thus ideal victims of fake dating and romance scams. There are many dating services and romance websites that promise people that they will meet the partner of their dreams, for a fee of course. Some of these scam dating services use fake profiles of men and women to suck in their victims with correspondence and even phone calls, while the victims keep paying. But when the money runs out, the romance is over.

But even legitimate dating and matchmaking services are mostly a complete waste of time because of the sort of people that subscribe to them. The problem with single or divorced middle-aged women is that many of them have ridiculously unrealistic expectations when it comes to finding suitable male partners. Many of those women also have a variety of psychological hang-ups that no intelligent man would tolerate. The grim reality is that interesting, intelligent, successful and genuine men do not have any problem meeting and dating women and would not dream of using dating or matchmaking services to find a date or a partner. Such men simply have the ability to circulate and organise their own lives without having to try and find women on dating websites or via matchmakers.

On the other hand, many men who register with dating or matchmaking services are losers in the first place. They don't possess the ability or the courage to walk up to interesting looking women and introduce themselves because they are scared to death of rejection. They work in uninteresting jobs and really are boring sods. Many of them are unattractive and unfit, with beer guts and other physical disadvantages. Then there are the predators, often dirty old married men who are looking to have a fling on the side with a lonely woman who cannot find a partner in the "real" world and is craving for true love. However, all the woman will get is sexual advances and as soon as the predator has his way with her, he will either keep her as a sexual partner on the side, or dump her and go back to his wife and family when she finally wakes up to him.

That is the problem. The pool of people who frequent these dating and matchmaking services are essentially losers. They are women, who in many cases have ridiculous expectations of males and are also riddled with hang-ups about men and sex. And the males are either boring sods who have little to offer intelligent women or they are predators looking for quick sex and nothing else. Any intelligent person would realise this and never go to these dating services for anything.

It is very hard to warn victims of dating and romance scams that they are being taken for a ride, because the scammers can be very slick and convincing. Of course the big indicator of a romance scam is when the prospective "partner" hands out a sob story and asks for money. As soon as this happens, that's the big warning sign that the "partner" is a scammer and the person in contact with that "partner" should immediately cut off all contact and never ever send money.

The head should always rule the heart and people who are lonely and looking for partners would do much better by getting involved in common interest groups or community clubs and organisations, or doing a bit of travelling and meeting a wide range of people. Even joining a new local club provides fresh avenues to meet potential partners, a far better proposition than any dating service or website.

JEWELLERY CLEANING SCAM

In many shopping centres and various fairs, scammers set up stands offering to clean your jewellery for free by using a miraculous aluminium metal plate. Indeed, when they dip your dirty bracelet or ring into the bowl of warm water containing sodium carbonate (washing soda) and touch this plate to it, the tarnish instantly vanishes and your jewellery looks like new. The scammers will tell you that their miracle plate will clean silverware and cutlery, virtually any tarnished object. The aluminium plate is untouched and lasts a lifetime. To the suckers watching the presentation, this seems like a miracle.

There's only one problem. The aluminium plate is NOT responsible for the cleaning process at all.

This is how it works. For instance, when silver tarnishes, it combines with sulphur and forms silver sulphide, which is black. When a thin coating of silver sulphide forms on the surface of silver, it darkens the silver. The silver can be returned to its former lustre by removing the silver sulphide coating from the surface

The tarnish is removed by a chemical reaction to convert the silver sulphide back into silver. This does not remove any of the silver. Many metals in addition to silver form compounds with sulphur. Some of them have a greater affinity for sulphur than silver - aluminium is such a metal. The silver sulphide reacts with aluminium and sulphur atoms are transferred from silver to aluminium, freeing the silver metal and forming aluminium sulphide. The chemical reaction is expressed as follows:

3Ag2S + 2Al ⇒ 6Ag + Al2S3

The reaction between silver sulphide and aluminium takes place when the two are in contact while they are immersed in the sodium carbonate solution. The reaction is faster when the solution is warm. The solution carries the sulphur from the silver to the aluminium. The silver and aluminium must be in contact with each other, because a small electric current flows between them during the reaction. The aluminium merely works as a catalyst to promote the electrochemical reaction between the sodium carbonate dissolved in the water and the tarnish on the silver, without the aluminium itself being affected.

The scammer will try to convince the potential suckers that it is actually the very special aluminium plate that he is selling that is totally responsible for cleaning the jewellery so miraculously, when in fact any piece of aluminium, such as kitchen foil will do the job. The goal is actually to sell the suckers a 10 cent piece of aluminium for $25 by claiming that the aluminium is doing the cleaning, not the chemical reaction between washing soda and tarnish. When confronted by this, most scammers will claim that their special aluminium plate is very different from other aluminium which will supposedly damage silverware and that their plate will not harm the silver. This is sheer nonsense.

If you are offered free jewellery cleaning by this method, by all means accept. Then when the scammer tries to sell you his miraculous aluminium plate, tell him that you know exactly how the electrochemical process works and that you know how to do the same thing with a piece of kitchen foil for virtually no cost. But at least you will have ripped him off by making him go to the effort of cleaning your jewellery for free. The secret of dealing with scammers and rip-off merchants is to make them pay in some way and never let them get away unscathed.

POWERBANDS AND VARIOUS POWER AND MAGNETIC PENDANTS AND DEVICES

People are stupid. In fact there does not seem to be any depths to the stupidity of people. They love to believe that there are mystical powers out there that can be harnessed for their benefit. Stupid people believe in lucky charms such as a rabbit's foot that they carry with them. Unfortunately it's bad luck for the rabbit. People believe in lucky horseshoes, amulets, pendants and other junk. Stupid people tap on wood for luck. They are morons.

Of course there are plenty of scammers out there that will take advantage of the stupidity of these people and make fortunes from selling them worthless devices that do nothing. This is really why religion exists, because stupid people love to believe that there is a god and an afterlife, even though there has never been a shred of evidence in the entire history of humans on this planet to prove this. Stupid people prefer to believe the most preposterously ridiculous stories in preference to any logical explanations of any phenomena.

One of the scams that seem to do the rounds for a while and relieve stupid people of their cash before being exposed is the power and energy device. This is usually in the form of a pendant or bracelet that has magnets, coils of wire or holograms on it that supposedly impart strength and well-being to the wearer.

Of course with all these gadgets, there is an element of the placebo effect, where people who really believe that a worthless piece of plastic can make them feel more energised and healthy will actually feel that way. This can also be performed with anything - a fake pill, an incantation by a guy wearing a silly hat or anything that will make a gullible person believe that he is actually feeling better because of some extraneous mystical force. The placebo effect is well-documented, but has nothing to do with anything except the workings of a person's mind.

Scammers love to demonstrate how their particular devices act on humans and they have devised many demonstrations that purport to show how people who use these bits of rubbish allegedly gain extra power and strength and are healthier. There are various tricks that the scammers use, such as the strength and balance test, however as usual, there is a simple trick to the way it is demonstrated that can fool most people who don't know how it's done.

The best thing is to view all these power and strength gadgets and alleged lucky charms and the like with a jaundiced eye and never get sucked into buying them, because eventually the scammers who market them are caught out and run out of town, however sadly, not before relieving a lot of gullible fools of their money for worthless pieces of junk. People are stupid and usually nobody can save people from their own stupidity.

BEAT THE ODDS SCAM

For many years, an advertisement has appeared in Sydney newspapers exhorting a system that will supposedly show horseracing punters how to beat the Totalisator Agency Board and make their fortunes with ease. A certain G Sharp of Queensland, the person operating this goldmine writes, "For 15 years I have used a simple but very effective betting plan to make big money from racing. I'm happy to share my secret with you - no risk, no obligation. Discover just how easily YOU TOO could be making much more money by following my advice." He then asks punters to apply for a booklet telling all about his dynamic betting system. Presumably this information does not come for free but must be paid for.

Even a quick glance at this baloney would have to set the alarm bells ringing in anybody's skull, but it seems that this Sharp person has most probably been making a tidy sum from gullible mugs willing to believe that he has found the Golden Fleece of punting. It is easy to figure out that his system or his claims cannot be genuine. For instance, if the government who runs the TAB discovered a loophole or system that allowed its betting operations to be beaten consistently, that anomaly would be immediately closed up. It is the same principle that allows casinos to bar card counters from blackjack tables, however in that case the card counters actually do have the ability to sway the odds in their direction.

The TAB would have been Sharp's first client to discover whether his system actually worked, and if it did, the TAB would have eliminated any method that allowed a person to win all the time. Sharp has been flogging his system for decades, so if the TAB was not concerned, then it must be worthless. The other glaring point is even more obvious. If Sharp has made "big money" as he claims and has the ability to make more money consistently from betting with the TAB, why would he bother chasing chickenfeed amounts of money from potential subscribers to his system? Surely he would be wealthy beyond belief and adding to his ever-growing fortune by using his system at the TAB every week, so why would he even consider squeezing a few dollars here and there from mug punters?

The one very important principle of wealth creation is that if you are smart enough to find a way to get rich quickly, the last thing you need is to create competition by revealing your method to others. If Sharp really knew how to beat the TAB consistently, the worst scenario for him would be to see thousands of punters armed with his alleged sure-fire method, betting their little hearts out every day and driving the odds down to nothing. The TAB is making more money than ever, so obviously nobody out there seems to have any method of beating it consistently.

There is only one logical conclusion - that Sharp's betting system is totally worthless and his real source of income is the proceeds from selling his betting system, not consistently winning money from the TAB. However as he has been running his advertisements for so many years, there must be plenty of mugs willing to believe that there really is a system that can beat the odds. The famous saying holds true - fools and their money will soon be parted.

BAREFACED BULLSHIT SCAM

Even when a conman floats a scheme that is so transparently ridiculous and bogus that a complete imbecile would see it as being crooked, some people seem to be so stupid and gullible that they will fall for it anyway. There seems to be a never-ending supply of suckers with money, who are ripe for the plucking by conmen.

One of the most outrageous scams in recent times was perpetrated in Australia by George Balos, who conned nearly $11 million out of gullible investors by purporting to represent the Ministry of Finance of the Dominion of Melchizedek. Armed with very elaborate documents with crests and coats-of-arms, Balos was most convincing. However if you wonder where Melchizedek might be, you would have to get into the mind of Balos because this mythical country is nothing more than a figment of his fertile imagination.

Most amazingly, very few of the people taken in by the phoney investment propositions actually checked to see whether Melchizedek actually existed, but they just handed Balos millions of dollars on the strength of his persuasiveness and fancy paperwork. Of course Balos had no problem producing all the necessary documents to perpetrate his scams because he was already in the printing business.

It is hard to feel sorry for the mugs who were taken in by this scam because even a very cursory check would have exposed Balos immediately. Even though he wore expensive clothes, drove a Rolls Royce and as the Americans say, he "walked the walk and talked the talk", the very fact that his schemes were based upon a fictitious country with a preposterous name should have immediately triggered alarm bells in the minds of any person living in the modern world. George Balos was eventually exposed and jailed for 11 years but has rightfully earned his place as one of the more creative conmen of our time.