Friday, February 27, 2015

SCAMS– The Science of Scammers

Scammers are always trying to find new ways to hook potential victims. But, with all of the reporting recently about scams, you probably have noticed some constants in how scammers operate. The Better Business Bureau has recently published three clues that you can look for if you encounter a scam that does not seem to use the same tactics that we have been talking about lately.

The techniques that scammers use are similar to legitimate marketing techniques, only with a scam you are out your money without a product or service.

Establish a Connection. A scammer will want to develop a trusting relationship so that you will feel confident to do what he wants. He might research your profile on social media, or ask questions that allow him to try to give you a sense that you both have common interests. This can occur online, on a telephone cold call or he may take his time in a person to person social setting to groom you as a target. The scammer may also use a tool called reciprocity. He will do something for you to make you feel good about him and to make you feel that you should do something for him.

Source Credibility. Scammers want to appear credible to their targets. They will make it look like that they are from legitimate businesses with fake websites, business cards or phone numbers. They may also use a tone of voice and jargon that makes it appear that they are legitimate.

Play on your Emotions. Like a good salesman, scammers will want to develop of sense of urgency to get you to decide quickly. The quicker you say yes, the less time that you have to think about and research his proposal. This can be done by telling you that his offer is available for a limited time, or there is a limited supply that is going fast. Also, claiming that there is an emergency that needs to be resolved quickly tries gets you to act without thinking.

One scam that uses these techniques is the “Affinity Fraud.” This is where a scammer/fraudster may use social relationships such as in their retirement community, church, or social group to recruit people to invest in a supposedly “hot” investment. Frequently, these are simple Ponzi schemes when the fraudster uses the money from early “investors” to pay off later “investors.”

The fraudster will take the time to develop a friendship with his targets. He will use different methods over time to play up his so called credibly. And at some point, he might play on your emotions to act before his opportunity goes away.

A classic fraudster who used Affinity Fraud was Bernie Madoff.

You can avoid Affinity Fraud by:

  • Not relying solely on recommendations by friends, club members or associates. Check out the investment from independent sources.
  • Finding out if the investment or product being sold is registered by using the Financial Industry Regulatory Authority (FINRA) BrokerCheck website (
  • Know where your money is being invested and who is investing it.
  • Getting everything in writing and check to be sure that your money is actually where it is supposed to be.
  • Being careful if the person is trying to pressure you into quick decisions. If it sounds too good to be true, it probably is too good to be true.
If you think that you have been scammed, file a complaint with the Washington State Department of Financial Institutions ( Since Affinity Fraud is often found among tight-knit groups, you may be motivated to try to work things out privately with the scammer. Report the fraud. There are probably other victims to the fraud, and the fraudster will continue to victimize other people.

We usually don’t think that we will become victims of fraud. But no matter how sophisticated our knowledge of financial investments might be, it is still important to be on the lookout for fraud no matter how much we trust our source or our skills.

The Better Business Bureau:


AARP Fraud Watch Network:



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