The Persistence of Online Scams
Various online scams and Ponzi schemes have been around for centuries, hundreds of years. There’s no letting up. We investigate hundreds of them on a regular basis, and the creativity of the scammers is unlimited. One of the things that we see is a lot of patterns in these scams. For example, today in the Wall Street Journal, they announced something we’ve seen for years: when interest rates go down, there’s more scams. Why is that? Well, when interest rates are high, people have options for investing their money.
How Scams Target Desperate Investors
If you have a retirement account, let’s say you have $800,000 in your IRA or your 401k, and you can put it in a CD and make six, seven, 8%, well, that’s good money. You can live off that. If the interest rates go down and you can only get 1%, now you’re looking for other options. That’s where the Bernie Madoff scam was popular because he was giving out high interest rates. So, people look for these other options, and the scammers prey on that. They prey on the desperation of people who need income from their interest.
Recognizing Scams and Asking the Right Questions
They will say, “Hey, we have this great investment. Put your money in, and we’ll give you…” In this case, one firm was offering 177%. All you got to do, like in this article, is just start asking some questions: where’s the money going? Show me receipts. Are you a registered security? There’s a lot of basic questions you can ask that will filter out a lot of these scams right off the bat.
Evolution of Scams – From Crypto to New Trends
So what are these scams about? Well, here’s another trend. It used to be that the scammers were saying it was crypto, right? For the last five or six years, crypto and Bitcoin were hot topics. People were seeing it in the news. Bitcoin was up $60,000, $70,000, right? And at one point, it was under $20,000. I remember when Bitcoin was $14,000, then it went up to $20,000 and $30,000, and people wanted to get caught up in that gold rush, as they called it, so they put their money in Bitcoin.
How Scammers Take Advantage of Cryptocurrency
A lot of people were not as sophisticated about cryptocurrency or digital assets, and they fell victim to anybody they saw on social media that said, “Hey, you can give your money to me, and I’ll put it in crypto,” because most consumers don’t know where to put the money in crypto. So that was the big scam. Well, now that crypto isn’t as in-demand anymore, they’re transitioning to new scams.
Scammers’ Changing Tactics
Cybercriminals change tactics, targeting individuals on social media. Here’s the key: the lifespan of scams is getting shorter. Back in the 80s and 90s, the scams were about real estate. It was leveraged real estate, and that lasted for 20-25 years. Then people were putting money into bonds, and that lasted 10-15 years. Then, it was a different kind of real estate, syndication, which lasted about five or six years. You can see the compression — the lifespan is getting shorter.
Scams’ Lifespans Getting Shorter
Crypto started around 2016, and it lasted until maybe 2020 or 2021 — four or five years. Now it’s Pig Butchering. Something new will come up in the next couple of years. Scams have to recycle quickly because people find out about them faster, thanks to the internet and social media. They can look it up and hear that it’s a scam.
Example of a Ponzi Scheme
What happens when they’re caught? Here’s an example: the SEC (Securities and Exchange Commission) accused two brothers of using investor money to fund a lavish lifestyle in a $60 million Ponzi scheme. What kind? Crypto, right? This is an older one where they did this back in the day. What did they do? They lured in 80 people by claiming to operate a crypto bot that would net investors 13.5% monthly — monthly! That’s, you know, tripling your money in a year, close to it with compound interest. Tripling your money in a year.
Importance of Due Diligence in Investments
So people were desperate for money, and they fell for it. This was a crypto scam. Ponzi schemes, scams, and fraud have been around for a long time, and they’re going to be around forever. Make sure that anytime you’re putting money in, you do your due diligence on the people involved, on the company involved. Make sure they’re licensed, they have the right credentials, they have a registered security number, and that you know where your money is at all times.
Verifying Investment Safety
You’re not just getting statements and returns issued by the company; a bank should be showing your money is in a bank somewhere. You want to see a bank statement with your money, with zeros after the figure, to show that your money is safe.
