List and describe several strategies to avoid a sham, a scam, or a pyramid scheme.

Question

What will be an ideal response?

Answer 1

1. If it sounds too good to be true, it is. Nobody is going to share their secret formula for making millions with no effort on your part for just $49.95. If it really worked, they wouldn't need your $49.95. No investment can guarantee to pay 25% or more annually. The only guaranteed investments are those "backed by the full faith and credit of the United States Government," such as Treasury securities and U.S. savings bonds, and they do not pay 25%.
2. If you did not initiate the correspondence, don't agree to pay anything. If someone else called, wrote, e-mailed, or comes to you, then don't go for it. Wait until you have done your own research and then you can go to them. ("Them" refers to a credible investment or sales professional.) This rule applies to any solicitation for personal or credit card information. If anyone tries to sell you anything where the risk is low and the return is high, something's not right. Don't worry. Later you will learn the basic law of risk and reward; the more you expect to earn, the more you could possibly lose.
3. If you have to pay anything to claim your prize, you didn't really win. One college professor was scammed into sending over $8,000 in "fees" to collect her "lottery winnings." Lotteries do not send email notifications from countries you have never even visited. Plus, legitimate sweepstakes and lotteries cannot collect money from your winnings. That's what the IRS does!
4. If you make money from new recruits, think twice before joining. Multi-level does not necessarily mean it is wrong or a pyramid scheme. Insurance companies are multi-level, with regional managers earning a commission on what their salespeople sell. Other companies that encourage recruitment are also legitimate, if their representatives sell a product and still earn credits for sales, even if they never recruit another person. But some companies are all about the "recruitment effort." You may have to pay a fee for every month you do not recruit, or you might only make money from other people joining. If every purchase made by a customer is simply an entrance fee that allows them to sell more entrance fees, then this situation is a pyramid scheme. Not only will you lose money, but you may also be part of something illegal (or at least unethical).
5. If it comes from another country, leave it there. So many scams come from other countries because it is easier to elude authorities. This situation is not the same as investing in foreign stocks or bonds, but rather avoiding those "opportunities" mentioned earlier, such as a Nigerian bank that suddenly discovers your rich uncle died and left you $1 million.
Following these five rules will help keep you safe and help you avoid any unscrupulous con artists and identity thieves now and in the future. Always heed rule 1, and remember: If they "need a decision right away," then your decision should be always be "No thanks."