You may have heard your parents say that there's no substitute for hard work, but hard work isn't exactly making you rich. You still have debts to settle, bills to pay, and you're not making enough to afford things you want for yourself. Yet street corners, leaflets, magazine articles, and TV advertisements tell you that they have the secret to infinite wealth and prosperity. The catch is you have to “invest” in a “business” or a “joint venture.” Don't be fooled: you're well on your way to falling into a scam.
Scammers and con artists are everywhere, preying on the wants and the needs of people for financial security or their desire for wealth. Over the years, many scammers have developed many ways to dupe people out of their hard-earned money. While some people would offer an “unpaid and voluntary” testimonial that the system works, people actually become poorer as a result. You don't have to be a victim of get-rich-quick scams before you learn your lesson. All you need is a proper perspective on financial security, and some ways to get rid of those con artists for good.
There's No Such Thing as a "Get-Rich-Quick" SchemeEconomics and business may seem complicated, but they're actually very simple. Here are four things you need to remember:
Money has to come from somewhere. Scammers will often tell you that “you don't need to work” to earn money. Even the richest stockholders hold eight-hour jobs keeping track of their investments, and buy and sell stock. To have money, you have to work.
Investments need time to grow. Some scammers guarantee that you'll make hundreds, if not thousands, of dollars in a single week. All investments need time to mature and to grow. There's absolutely no way you can make a million dollars in a week if you only invest one dollar.
Money is not infinite. There is no such thing as “unlimited income,” although scammers will woo and lure you with the promise of “infinite opportunities.” Even rich people have a cap and a limit to how much they earn and make.
No risk, no reward. The only ways to make big money out of a small investment is to gamble on the lottery or a casino. There's no substitute for earning money the decent, honest way.
Kinds of ScamsHere are some common scams on the market today:
Multi-Level Marketing. Pyramiding schemes, also called Ponzi schemes, have been around for a long time. Some companies frown upon the term “pyramiding,” and would rather call themselves “multi-level marketing companies” or “direct-selling companies.” While MLM and direct selling are completely legal, they often sell goods at a jacked-up price and are near impossible to sell (like perfumes, soaps, shoes, and other things you can buy at a department store). The only way that you can earn money in this scam is when you do “people pairing,” or recruit others into the system. The only money-maker in a multi-level marketing scheme is the person on top of the pyramid; the rest lose out.
Elevator schemes. Also called matrix schemes, this scam usually promotes expensive gadgets like cell phones and laptops as “reward” items. In an elevator scheme, you buy a token item at a higher price than what it should cost. To get the “reward,” you need to be at the top of the list, and you need to recruit a set number of people into the scam. While there's a promise that you'll be on top of the list, the chances are so slim that you might as well give up all hope of getting the reward.
High-yield investment programs. HYIP, as it is often called, is simply a scam that promises that you can make money out of absolutely nothing. HYIP scams may promise that you can have high rates of return, in exchange for a “small investment.” HYIP scams do not give out details, or use vague terms like “prime” banks that do not actually exist.
E-mail scams. Chances are that you get spam e-mail, like you have just won in a lottery you didn't participate in or that your help is needed to funnel out money from a corrupt and war-torn country. The only thing these scammers need is your bank account number and your credit card number, and you'll see all your money go down the drain.
Don't Buy Into ItEven the most hard-line of MLM recruits know deep in their hearts that the scheme is a scam. Many get-rich-quick schemes are obvious con acts, but many people fall victim to the lure of easy money. Think about it: why would you buy bath soap for twice the price you would get for one at the supermarket? If everyone recruited their friends and family members into one organization, then is it possible for everyone to earn “unlimited income?”
Be very wary when you hear these words in sales pitches for scams:
“Direct selling” usually involves products that no-one wants to buy.
“People pairing” and “expanding matrix” are cleaned-up words for a pyramid scam.
Some scammers will often say that the market will never saturate because not everyone will succeed, except you. In reality, they pitch this to everyone.
Scammers usually disguise their schemes as a “business,” and often use motivational videos to tell you how much of a winner you are.
Money-making schemes often pitch that you don't have to work to make money. A common scheme is to tell people that they don't have to “slave over a job” to make “unlimited income.”
InvestigateSome scammers, particularly MLM affiliates, will tell you that they're completely legal, and will show you all sorts of papers and documentation to prove it. Some will also say that if they were a scam, distributors and manufacturers of major products would not do business with him. Don't be fooled; legal papers, checks, and other documentation can be forged. Established con schemes may also brag about their funds to keep Federal and private lawyers from bringing down the “business” or the “partnership.”
Like any business venture, it pays to see if the company is stable, is registered with the right government agencies, and has a solid reputation. If you're absolutely sure that the company is legitimate and stable, then it may be OK to invest in it.
Ask the Tough QuestionsDon't be afraid or shy to ask challenging questions. If the company really claims to be a multi-million dollar earner, then its most loyal “business partners” should know a thing or two about basic business concepts like market saturation, distribution channels, market share, market penetration, and supply and demand. Never settle for personal testimonies, parables, or motivational drivel.
Scammers will beat around the bush and say that this kind of thinking is for “losers,” and that you should sell your car to make an investment in the “business.” If they force you to make tough decisions, then you have the right to ask the tough questions. Legitimate businesses that don't con and dupe other people will be more than willing to accommodate and take up your challenging questions. Scammers will beat around the bush, or would give a very vague answer to a simple question.
Promises of wealth can blind people into thinking that money does grow on trees. Once you fall into the trap of a get-rich-quick scam, you can't get out of it easily. Hard work and honest labor can make you rich, but it will take time, patience, dignity, and diligence.
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