Have you ever bought a product based on a powerful testimonial, only to find that it did not in any way measure up to the hype? Or, grabbed a low-interest credit card offer only to find the rate quickly soared to ridiculous heights? Or, gotten something for free that really wasn’t free — like an awesome deal on lodging that turned into a high-pressure sales pitch for a timeshare?
These experiences can be costly and, frankly, kind of humiliating. You find yourself wondering why you didn’t see it coming.
Well, I’m here to offer you a money-back guarantee that if you follow my 10 Golden Rules of Scam Prevention — or even just some of them — you’ll never be foolishly parted from your money again.
1. Testimonials are a testament only to gullibility
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There’s only one kind of testimonial worth believing — the kind that comes from people you personally know and trust.
Testimonials from strangers you see on TV or online may very well be lies. I’ve personally met more than one infomercial actor who’s 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.
2. ‘Documented proof’ is neither documented nor proof
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Don’t believe your eyes. Anyone willing to rip you off is willing to create fake checks, letters or anything else to support his or her sales pitch. Such con artists are 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 multilevel-marketing meeting at which a speaker took the stage and held up a check for some ungodly amount of money. He claimed it was one month’s earnings that came entirely from sales made by those in his down-line.
After the meeting, I asked the speaker exactly how many people were in his down-line. A few calculations revealed that 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.
3. Guarantees are no guarantee
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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 a major retailer or company that is a household name offers me a written guarantee, I might believe it. 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 he doesn’t refund your money, what are you going to do? Take him to court?
4. It’s not fine to ignore the fine print
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Virtually every deal that goes awry is the result of people listening to the sales pitch without reading the fine print. If you were unaware that your mortgage payment would go up after three years, your credit card interest could jump from 9 percent to 29 percent, or that mutual fund was risky — well, 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.
5. Haste lays waste to your savings
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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.
6. Seek and you shall find
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I once got an email from a reader asking if she should pay some website to get a government grant for her small business. I went to a search engine and put in the words “government grants for small business.” In 0.31 of a second, 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.
I was glad to help the reader, but I solved this problem in less time than it probably took for the reader to send me the question. The internet is a powerful tool — use it.
7. Before listening to strangers, listen to strangers
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Don’t just search for the pitch you’re getting. Add words like “review” or “rip-off” to your search. There are sites that specialize in consumer reviews, from to to the . With all this information available, it’s amazing that people still blindly enter into transactions when they could easily have known better.
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 they are worth a fraction of a second to uncover with an internet search.
8. Use the help you’ve already hired
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Imagine paying thousands of dollars for expert advice about 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 , then ignore all the free advice they publish.
For example, here’s just a little of the information the Federal Trade Commission has published on avoiding rip-offs:
9. Getting something free? You might be the product, not the customer
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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 free things you find — 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 didn’t have it.
10. If it sounds too good to be true, it probably is
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The best way to avoid getting ripped off is to simply ignore people and companies that promise simple solutions to complex problems. 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?
The bottom line
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Avoiding being scammed is simple, but it’s not easy. It’s simple because simple logic reveals most scams — see rule No. 10. But it’s not easy, because humans are programmed to trust people and to hope for the best. Deprogramming takes time, but now is as good a time as any to start the process.
What are your tips for avoiding scams? Share with us in comments below or on our .
Kari Huus contributed to this post.