I’ve encountered three too good to be true offers this week in some shape or form. I have personally seen one of them, have been told about one by a friend, and a third one by a reader here.
The easiest to identify among these was the one that my friend came up with. He is looking to buy a used car, and a popular way to do that in the US is to go to Craigslist and search for cars.
He came up with one that he really liked a lot and from the low price and good condition it was immediately clear to me that it is a scam of some sort.
I asked him to send an email but not give out his phone number or anything else. Within a matter of minutes, the other person responded saying that he was an Oceanographer and out at sea, and if my friend wired him the money, he will have the car shipped to him immediately.
It’s an obvious and old scam that Craigslist themselves warns everyone about.
The second one was one that I faced myself, and it went like this. I have subscribed to a website for some financial information and they sent out an email last Thursday saying that they have this stock pick that will definitely go upwards from Monday, and they will reveal this stock to their subscribers on Friday.
Now, this is not a paid subscription, I am a free subscriber and these people have never sent an email earlier so I was really surprised to see that and I thought this is ridiculous – you are sending me an email to tell me that you will send me an email?
Then the next day they did actually send the email and name of a penny stock with the promise of a quick buck. I ignored that as well.
Then on Saturday, they actually called to tell me about the stock pick and for me to make sure that I don’t miss the opportunity to buy the stock. I missed the call so they left a voice mail.
I then observed this stock on Monday and it went up by quite a bit, then again on Tuesday when they sent a reminder email.
My curiosity was really piqued by then and I’d be lying if I said I didn’t consider buying a little of it, but good sense prevailed and I left it at alone. Then yesterday the stock fell 6%, and today it fell by 17%!
I can see that this penny stock has still jumped more than 100% in the last 5 days, but I really don’t know if anyone has really benefited from this or if it just hits the circuit without allowing anyone to really buy into it, or even worse whether it will come down like a pack of cards in the days to come.
This is a curious situation and I’m happy to view this from the sidelines. It’s a too good to be true offer and it looks like a pump and dump situation where things end badly for the guy who owns the stock last, and I don’t want to be that guy.
I can’t think of how someone can have such concrete information of daily movement of stocks unless they are manipulating prices, and I want no part of such a risky and what appears to be shady business.
The third incident is of a reader leaving a comment on the suggest a topic page about companies that offer very high returns for your investment, and one in particular that offers a 36% annual return.
This is just way too high to be reasonable and common sense and even historical experience shows us that usually these schemes end badly. There is normally no easy way to prove them before hand and even when you do present proof like in Madoff’s case – where Mr. Markopolos sent detailed information to SEC at the beginning of the decade that Madoff was a fraud – no one took notice for a long time!
I think people fall victim to their greed and ignore the warning signs by taking comfort in numbers, or by looking at the credibility of the person who is attached with the scheme even when history tells us that only people who can muster a lot of credibility can run such frauds and are most typical of doing something like this in the first place.
After all, Madoff ran NASDAQ once, and if there are a large number of people who fall for something – then that means a large number of people lose money along with you, just that – it doesn’t protect you from any loss.
I’ve personally avoided every offer that looks too good to be true that I have ever come across, and I just wish and hope that everyone else is as skeptical about these type of offers as well and remembers that a fool and his money are soon parted.
This post was from the Suggest a Topic page.
