If you’ve ever fallen victim to a scam – and who hasn’t – you’d probably like to avoid repeating the experience. Well, I’m here to offer you a money-back guarantee that if you follow the 10 Golden Rules of Scam Prevention, or even some of them, you’ll never be foolishly parted from your money again.

Rule Number 1: Testimonials are testament only to how gullible people are.

There’s only one kind of testimonial worth believing – the kind that comes from people you both personally know and totally trust. Testimonials from strangers you see on TV or online may very well be lies. I’ve personally met more than one infomercial actor whose told me they simply read a script without ever seeing the product. So the next time you see an ad, website, or infomercial, ignore all testimonials.

Rule Number 2: “Documented proof” is neither documented nor proof.

Don’t believe your eyes. Anyone willing to rip you off is willing to create fake checks, letters, or anything else. They’re able to easily do so by using programs like Photoshop. And even if the earnings you see are real, that has no bearing whatsoever on what you’ll earn doing the same thing.

I once attended a multi-level marketing meeting where a speaker took the stage and held up a check for some ungodly amount of money. He claimed that it was one month’s earnings that came entirely from sales made by those in his down-line. After the meeting, I approached the speaker and asked exactly how many people were in his down-line. A few calculations revealed that in order for everyone in his audience to make the same monthly income, they’d collectively have to recruit more people than there were on the planet.

Rule Number 3: Guarantees are no guarantee.

One of the most universal components of any scam is that the results are “guaranteed, or your money back!!!” Guarantees only carry weight if you know and trust the company behind them. If Sears or Sony offers me a written guarantee, I might believe them. But if some guy on an infomercial or unknown website offers me a money-back guarantee, it might as well be in Chinese, because it’s totally meaningless. When they don’t refund your money, what are you going to do, take them to court?

Rule Number 4: It’s not fine to ignore the fine print.

Virtually every deal that goes awry is the result of people listening to the sales pitch without reading the fine print. If you weren’t aware that your mortgage payment would go up after three years, or you didn’t realize your credit card interest could suddenly jump from 9 percent to 29 percent, or you didn’t know that mutual fund was risky – then you didn’t read the fine print.

I was a stockbroker for 10 years and have been involved with sales of one kind or another for nearly 30. Trust me – a salesman’s job is to sell “sizzle.” It’s the fine print’s job to offer the “steak”. There’s a reason that fine print is there: If you don’t understand it, find someone who does.

Rule Number 5: Haste lays your savings to waste.

If the “train is leaving the station”, wait for the next one. The easiest way to steal someone’s money – other than perhaps with a gun – is to force them into a quick decision.

The only people who can wisely make snap decisions regarding a purchase are those who are experts at what they’re buying. You’re an expert at buying milk, jeans, or any number of consumer goods. But if you’re not an expert at what’s being sold, slow down. From buying a house to getting married, the time spent on a decision should directly correlate to its potential ramifications.

Rule Number 6: Seek and you shall find – in .31 seconds.

Last month I got an email from a reader asking if she should pay some website $400 to get a government grant for her small business. Here’s what I did: I went to a search engine and put in the words “government grants for small business.” In .31 seconds I was directed to a U.S. government website with these exact words: “The federal government does not provide grants for starting and expanding a business.” Thus, the site was a rip-off: Problem solved in less time that it probably took for the reader to send me the question.

The Internet is a powerful tool – use it.

Rule Number 7: Before listening to strangers, listen to strangers.

This is related to the rule above, but instead of just searching for the pitch you’re getting, add the words “review” and “ripoff.” There are sites that specialize in consumer reviews, from Scam.com to the Ripoff Report to the BBB. With all this information available, it’s amazing people still blindly enter into transactions where they could easily have known better.

As noted above in the rule regarding testimonials, however, recognize that anyone can say anything about anything for any reason. Reviews, both good and bad, can be made up, and frequently are. But they’re better than nothing, so therefore worth the .31 seconds to uncover.

Rule Number 8: Use the help you’ve already hired.

Imagine paying thousands of dollars for expert advice on avoiding rip-offs – then totally ignoring it. That’s what a vast number of Americans do, because they pay thousands of dollars in income taxes to fund agencies like the Federal Trade Commission, then ignore all the free advice they publish. For example, here’s information the FTC has published on just one topic: avoiding online rip-offs.

Rule Number 9: Getting something free? You might be the product, not the customer.

We all take advantage of free stuff, from information to products. In fact, you’re doing it right now. But be aware, lunch isn’t the only thing in life that isn’t free. The motivation for those offering some free things is apparent – for example, this article is surrounded by ads that hopefully will generate enough income to justify the time I spent writing it. (Speaking of which, it wouldn’t kill you to click on an ad now and then, you know.) But with other things you find free, especially online, consider the motivation of those offering it. If you’re being asked for a lot of personal information, that information could be sold: perhaps to someone you’d rather not have it.

Here’s a recent example. According to this recent article in the Wall Street Journal

Many of the most popular applications, or “apps,” on the social-networking site Facebook Inc. have been transmitting identifying information – in effect, providing access to people’s names and, in some cases, their friends’ names – to dozens of advertising and Internet tracking companies.

And that’s a well-known and respected site. One can only imagine what smaller and lesser-known sites might be doing with your information.

Rule Number 10: If it sounds too good to be true…

This saying has been repeated so many times it’s practically meaningless. But it’s true. The best way to avoid getting ripped off is to simply ignore people and companies who promise simple solutions to complex problems. They don’t exist. Nobody is going to show you how to buy a house for $398, nobody is going to provide a consistent 12 percent return without risk, and nobody knows how to make big bucks with little effort at home in their spare time. Think about it: If these claims were true, why would the people making them share that information with you?

As I said, you don’t have to follow all the above rules to insulate yourself from con artists: Just follow a few. For example, the next time you watch an infomercial, imagine it without the money-back guarantees and the testimonials. Would you still buy what they’re selling? Not likely. The next time you see some online offer to make money at home, do a search and see what comes up – then see if you’re still interested.

Bottom line? Avoiding being scammed is simple, but it’s not easy. It’s simple, because simple logic (see Rule Number 10) reveals most scams. But it’s not easy, because humans are pre-programmed to trust people and to hope for the best. De-programming takes time: But now’s as good a time as any to start the process, so use the rules above and make 2011 the year you become scam-proof.

Stacy Johnson

It's not the usual blah, blah, blah

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  • jam mes

    Great post this very helpful!