You’re scrolling your social media feed. You see it an “double-your-money” scheme, or a course that teaches you how to earn cash quickly! These quick-money schemes are available everywhere in a variety of forms. The terms and calls to action may be different, but the message is the same. We keep getting caught in the trap. What’s the reason for this and how can you be sure not to fall for the trap?
What’s the Get-Rich-Quick scheme?
The phrase “get-rich-quick” is commonly used to describe investment scams that offer unrealistic returns. They give the impression that investors can earn this rate of returns with very little expertise, effort or time, and at a minimal risk.
The majority such schemes will be promoted via spam emails or cold calls, or via social media ads. They go back to the past and could appear as an entire system, a coaching program, a work-from-home opportunity, or a different variant that makes a false income-generating promise.
A Short History of the Get Rich-Quick Plans
In October 1822, Scottish adventurer named Gregor MacGregor left the shores of Central America for the United Kingdom. When he arrived in London MacGregor earned him the title of “Cazique” or the prince of the country of Poyais.
He said he found an undiscovered land called the land of Poyais which offered the people the chance for a lifetime. He said Poyais as a fertile and fertile soil which could produce three harvests per year. The water from Poyais is so clean it could quench all thirsts. In addition precious gold pieces were found in the rivers of the exotic region.
Gregor MacGregor opened his office in London and began to tout the advantages of investing in or settling down in Poyais. He would refer people who needed convincing an article of Thomas Strangeways (actually MacGregor himself) which outlined the advantages of the tiny island. Soon, people would be able to swap pounds in exchange for Poyais dollars, or buy the entire parcel or piece of Poyais land.
MacGregor made a profit of nearly PS200,000 which is PS3.6 billion in current dollars However, there was a issue. The project was not funded by Poyais! The whole project was an invention by his imagination.
The Poyais scheme was perhaps the most brazen fraud in the financial world, but it was it was far from being the first or the last.
Get-Rich-Quick Schemes: Examples
Nowadays, we witness variants of this scam taking money from people by using convincing techniques. Here are a few of the most well-known examples of these frauds.
1. It’s the Advance Fee Scams
Scams involving advance fees are among the most popular type of trust scams. They promise victims the victim a substantial sum for a minimal upfront cost. However, the money doesn’t show up… After the victim has paid the amount, the scammer is either gone or invents the additional fees to get the huge sum.
The most popular form of scams involving advance fees consists of letters from wealthy individuals who are caught in a tense situation. They demand a tiny amount of money and promise a huge reward when they get out of the chaos. The letters used to come from suspected prisoners, but lately, the “Nigerian prince” scams are becoming more commonplace.
2. Pump and Dump Plans
A pump and rug pull scam is another fraud which earns millions of dollars each year. The perpetrator creates hype around something that isn’t worth it and convinces individuals to invest in the scheme. As the price increases then the fraudster sells their shares at the highest point and leaves investors behind.
Schemes to dump and pump are frequent in the cryptocurrency market. Schemers frequently send signals to pump users through the form of a messaging application, which can make people who are inside buying the coins.
This increases the price of the coin and draws in more people who believe that it’s an attractive investment. The insiders then are sold off at the highest price and investors are unable to make money.
3. Ponzi Schemes
An Ponzi plan is an investment scam which pays investors who are already invested with money from investors who are new. The Ponzi scheme is named after the name of an Italian immigrants Charles Ponzi, who made promises of great magnitude into the 1920s. He was able to guarantee doubling the amount you pay within 90 days.
The majority of Ponzi schemes claim to invest your money in high-reward , low-risk investments. In reality, scammers use the funds to pay early investors , and keep some of it for themselves.
With no real income, Ponzi schemes require a continuous flow of money to keep the scheme afloat. If the flow of cash dry out or enough investors request to get their money back at one time, the whole scheme will collapse. This was the case in 2008 when Bernie Madoff who ran the biggest Ponzi scheme ever, worth $64.8 billion.
4. Pyramid Schemes
The majority of people think that Pyramid schemes are Ponzi schemes, however they are distinct. With Pyramid scheme schemes, the criminal isn’t required to borrow money from investors new to pay investors who were early. Instead, the members are compensated for bringing in new investors to join the scheme.
As membership increases and everyone is cut. However, at some point the expansion of membership isn’t feasible and the program becomes unsustainable.
These schemes can appear to be genuine MLM (MLM) companies. These are businesses which make money from the downstream sale to give out bonuses to recruiters. They don’t make legitimate sales. Instead, investors get paid with the money they receive from investors who are new.
5. Coaching Plans
The coaching programs can be considered to be advanced fee plans, but instead of paying cash now to receive an enormous amount of money later, clients are paying for information that organizers guarantee will bring the organization money.
However, in the majority of instances, the claims aren’t true. The programs advertised don’t usually meet the promise and people are frequently attracted to more expensive classes to fulfill that promise.
Most coaches scheme coordinators have compelling stories of rag-to-riches and positive reviews from clients to promote their programs.
How to Guard Against Get Rich-Quick schemes
Each of these strategies employs similar tactics and are successful in times of transition. When MacGregor MacGregor created the concept of Poyais the world was in turmoil. Many nations were declaring independence, and it was easy to imagine that Poyais could be one of them.
Con artists often profit from the excitement or fear of pandemics and wars and provide opportunities that offer unrealistic return. Although you may earn an initial higher yield but the money will eventually run out, and eventually you’ll lose all of your investment. Before you make the move, be sure to look for these warning signs to avoid falling into an investment trap.
- Be wary of investment opportunities or schemes that ask you to recruit others to receive a reward.
- Beware of schemes that are advertised as an “once once in the lifetime” chance and with a urgency.
- If information on profit-sharing and profit-making aren’t clear or clear It’s likely a scam.
- If you have to pay in advance for an employment opportunity by way of the form of an “orientation cost” (or “buy in” this is an additional warning sign.
- Avoid schemes that employ over-the-top marketing phrases like “become yourself your boss”.
- A guaranteed income without any knowledge or experience is another ominous sign of a scam you must stay clear of.
It’s impossible to make money fast through these Scams
Here are a few ways to recognize fraud in financial scams, but in all cases you should consider getting financial advice prior to making a decision to invest on any plan. As they say, “if it sounds too appealing for it to be real, then it is”.
