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Scams of the Modern World – Pump and Dump, Software and Cold Calling

The previous post on scams looked at some of the cons that are perpetrated by unscrupulous people in the modern world. This week, we will conclude by discussing more schemes used to make us part with our money.

Pump and Dump Schemes

As with seminars, there is legitimate information to be received from forums and newsletters. Nevertheless, this legitimacy makes the job of the scammer easier as it gives them the means to mix bad apples with the existing good ones rather than creating a new basket. With anonymity being an integral component of the Internet, the helpful tipster could be a pump and dump schemer or a company insider hoping to push their agenda. Using aliases and Internet proxies, one person could use a single computer and post several messages from different names and IP addresses to push an unknown or thinly-traded stock and create interest in it.

Online newsletters could be used by companies to promote their stock. Touting a stock is legal as long as there is disclosure about who pays the writer. However, withholding this critical information or lying about it constitutes fraud. Some promoters may reveal insider tips such as upcoming products or soon-to-be signed contracts in newsletters that would not be available to other investors. In retrospect, it could turn out that the insider tips were part of a pump and dump operation. It is essential that such newsletter subscribers do their due diligence and investigate if the analyst is unbiased after all.

Software Scams

Due to the widespread use of computers and the Internet, software scams are a good money-making machine for fraudsters. Typically, these scams begin as a helpful pop-up “Your computer is infected. Please click here to scan your system” (or something similar). When clicked, the scanner may seek payment or, even better, say it is “scanning your system” for a few minutes, and then seek payment to clean your registry/system.

Some programs come with adware and malware that could compromise your computer’s security and serve as a botnet or simply let a hacker steal your personal information. From a user standpoint, some of the the best safeguards include not clicking on links from unknown sources (even if it is on Facebook), scanning and updating your computer regularly, and using only a trusted computer for online transactions.

Cold Calling Scams

Phone scams are still around even though the web has become the primary channel for scammers. These schemes could involve professionals offering unsolicited tips on hot stocks or business opportunities. Sometimes, these fraudsters play with emotions by phoning seniors as their grandchild who is stuck in a foreign land, while on a trip, and asking for monetary help. As incredible as this scam might seem (the first reaction would be to ask why the grandparent would not verify with their son/daughter about where the grandchild is or inquire about this “difficult” situation), people still fall for them.

Most, if not all, scams involve monetary loss and considerable effort and time have to be spent to return one’s life to normalcy. Evidently, the best way out is to avoid these scams by learning about them and protecting our identity. Information about where to report scams can be found here.

What actions have you taken to safeguard yourself and your dear ones from such frauds? Did you learn about a scam the hard way? Was it your gullibility, greed or both that facilitated the con or was the scammer simply too good at their job?

About the Author: Clark works in Saskatchewan and has been working to build his (DIY) investment portfolio, structured for an early retirement. He loves reading (and using the lessons learned) about personal finance, technology and minimalism.  You can read his other articles here.

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About the author: Clark works in Saskatchewan and has been working to build his (DIY) investment portfolio, structured for an early retirement. He loves reading (and using the lessons learned) about personal finance, technology and minimalism. You can read his other articles here.

{ 12 comments… add one }
  • FT FrugalTrader February 27, 2012, 9:19 am

    Good post Clark. I’m not sure how my phone number got on the scammers phone list, but I’ve been called by a guy telling me about a “computer leak” and that he needs access to fix something. Not sure what we can do in this case but hang up!

  • Marianne February 27, 2012, 12:31 pm

    I was the victim of one of those ‘virus scan’ viruses. Thankfully I recognized what was going on right away and we keep our files very well backed up. I grabbed what I knew hadn’t been backed up yet, turned off the computer, unplugged my network cable and portable hard drive. Hubby came home, reformatted and life was back to normal. I was surprised at how suddenly it happened. It was a particularly vicious trojan that came from a link on someone’s blogroll. It immediately took over my computer, kicked up the ‘scanning’ image and wouldn’t let me back into Firefox. Not cool.

  • Mike February 27, 2012, 2:00 pm

    We get about 1 call a week asking us to check something on our computer. Total scam. Nothing you can do but hang up.

  • passiveincome February 27, 2012, 5:43 pm

    I always get calls from a so called captain and saying that I won a ticket for a boat cruise. I hate that. I think the do not call list is actually where those people get the list to call from.

  • Elbyron February 27, 2012, 6:54 pm

    I own a domain matching my surname, and a couple years ago a letter arrived in the mail saying my domain service was being terminated and I had to pay up or else lose my domain. But the letter didn’t say who it was from, and my registration wasn’t going to be up for renewal for quite a while. It was a very convincing letter, but my current registrar said they knew nothing about it, so obviously a scam. The web address they provided appeared to belong to some other hosting company, who was probably trying to convince people into thinking they are being forced to transfer their domain. They likely just got the mailing address off the domain’s whois record, which at the time was not private because that service cost extra. I’ve since moved the domain to another host who charges half the price and includes the private whois info for free.

  • Clark February 27, 2012, 9:07 pm

    If you get repeated scam calls, do they come from the same number? Generally, I do not answer calls from numbers I do not recognize. I might miss a few legitimate calls but chances are that if the people are known to me and have my phone number, they will have my email address or know whom to ask for one. They can always leave a message, if I don’t pick up. The only time I fall for these cold calls is when they arrive from private numbers.

  • Joe February 27, 2012, 9:25 pm

    I’ve been getting a lot of Robo calls for debt consolidation type services. I wonder whether it’s an outright “give us your SSN so we can steal your identity” scam or “sign up for an usurious consolidation loan” indirect scam. What happened to the good ol’ days of real person scams? They called you up and offered you a trip to “anywhere in the world”. I toyed with one of those guys for like twenty minutes asking about how I’d be able to visit Pyong Yang. I was surprised; apparently it’s as easy as showing up at the airport…

  • SST February 28, 2012, 1:07 am

    I wonder how the voters of Ontario feel about political party robo calls scamming them out of their democratic right to vote?

  • Jim February 28, 2012, 3:03 pm

    I would like to share my exposure to a recent scam.

    I have a time share that I was not using. So, I posted on the internet to sell the slot. Soon, I got an email indicating interest. Then a pretend negotiation took place. (This gives you the sense of “this is for real”) After this pretend negotiation, I was asked to provide my name and address so that they can send a check.

    True enough, I got a Fedex guy standing at my door the next day with a package. Inside, was a check in the amount far exceeding the price we had negotiated.

    Then I got an email from the buyer telling me that he had made a mistake and sent me more than negotiated. So, he asked that I wire him the “extra” money back. Oh, he was very generous in giving me “$100” for my trouble.

    I got suspicious and started checking the back account. I found out that the bank account is a real account but associated to a school. So, I called the school and confirmed that they have never written that check.

    I reported this case to the police and was told that there are many of this “check” scam where they send you more money using a fraudulent check and ask you to wire money back to them. By the time the bank discovered the check is fake, it will have been 2 weeks later and the crooks are long gone.

  • SST February 28, 2012, 10:18 pm

    Been searching for a place to put this…”scams of the modern world” sounds as good a place as any.

    I know someone who used to work for Investors Group and now operates his own financial planning business in Calgary. A brief summary of how IG operates (or at least the one he worked at):

    (*all numbers are for example only)

    An IG consultant would go out and get 200 clients. IG would have two baskets of equities etc. to sell them. The client group would get split in two with each group of 100 buying either basket A or B.

    After year one with IG, the “losing” group of clients would get dropped, leaving only 100. This group would again be split in half; and again 50 would be sold basket A, the other 50 basket B.

    After year two…repeat.

    After year three, what is left is a group of 25 “winning” clients.

    The IG consultants then go out and recruit another batch of 200 investors based on the strength of their three year performance.

    Greedy for commission and management fees much?

    The ex-IG person said starting his first week with IG he was presented multiple times with manufactured client dossiers — invented portfolio values and returns printed out on a sheet of paper. The consultant would then take a thick black Jiffy marker and blank out where all the “personal” data would be — name, address, etc. This was done to make the newly created account look even more real and official. The reason behind this was that the consultant would use these to show prospective clients a positive track record, even though what they were being shown was completely fabricated.

    Creative capitalism or something else?

  • FT FrugalTrader March 1, 2012, 11:22 am

    Sorry for the delay in posts guys, been out of commission due to a virus running through the house. Net worth update coming up tomorrow.

  • Youngandthrifty March 4, 2012, 11:11 pm

    Watch out for the email scammers that claim there is an inheritance waiting for you from a distant relative in some foreign country but they need help with the lawyer fee… Yeah right buddy.

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