Wednesday, February 6, 2013

Six Archetypes of Fraud Disguise

Financial fraud is up... way up.

In 2011, according to FTC report, Americans reported 1.5 MILLION cases of fraud. That is 62% increase in merely THREE YEARS.

And vast majority of the fraud was never reported, or never investigated, because the victims were intimidated or embarrassed into not complaining (and in some cases, offered a refund for their silence).  The news media, chasing the big stories (think Enron or Madoff), don't bother with the small stories.

The bad economy, the lack of enforcement, the Internet allowing easy reach to plenty of potential victims... all contribute to an explosion of financial fraud.

Scams don't change, but disguises do. However, disguises generally fall into six archetypes, according to Kimberly Blanton, a fraud specialist at Boston College.

The six archetypes are:

  • The rescue squad -- always show up after a disaster, like hurricanes, tornadoes, tsunamis... Fake charity scam is one. If there is no problem, they claim they will solve a great problem... and you can profit off their brilliant solution... by giving them money. Favorite story: invest in ostrich farm where feathers are used to clean CDs.  
  • The problem solver -- you have a financial problem? We can help! Really! Just give us money! Fake mortgage refinancing, debt settlement, online loans... pay them and they claim they will solve your problems. In reality, they take your money, then ruin you in more ways than one. 
  • Senior Specialist -- seniors need negligible-risk to no-risk stuff, and scammers are there to meet their needs... by lying, usually with fake investment instruments, and often, through fake financial advisors (who are paid by amount of investments they attract). 
  • The Magician -- people who claim they have something that will make money out of practically nothing. These people promise outrageous returns (Zeek promised up to 2% PER DAY), through something special that cannot be disclosed in detail (i.e. a secret). But they need your money to do it Sometimes, they really are magicians. Paul R. Burks, head of Zeek Rewards, really was a trained stage magician. 
  • God's Messenger -- defrauding a whole congregation is not hard if the scammer can convince them that he is working on the side of God. And many have done so. Once the scammer earned their trust, the scammer solicit investments from them. Sometimes, the scammer claimed that all the money is going to do God's work, when most of them are going into his own pocket. 
  • The Confidant -- the scammer is sharing something very special... the secret to wealth... except there is no such secret. But the victim was lead to believe there is, which really stroked their ego, and precluded detail questions and understanding. 

Recognizing these archetypes will allow you to be more cognizant of fraud.

Enhanced by Zemanta

No comments:

Post a Comment