Tuesday, September 23, 2014

Keeping what we have against all odds

kw: book reviews, nonfiction, scams, aging, self protection

The older we get, the more paranoia is justified. Someone really is out to get us! Here are the top 5 risk factors for getting scammed:

  1. You are older than 55, and the risk goes up every year.
  2. You think you are too smart to be scammed.
  3. You are uncertain your retirement savings will last.
  4. You are suspicious of "traditional" investments ("the Market").
  5. You frequently attend "free dinner" seminars about retirement-related subjects.
A couple of years ago AARP sponsored a new book, Outsmarting the Scam Artists: How to Protect Yourself From the Most Clever Cons by Doug Shadel. Now it is out in a large-print paperback, making it affordable and easier to read. In it we find the way a scammer tries to get us "under the ether", numbed by emotional factors and our own greed (and don't think you don't have any greed!). We also learn the process they have worked out to fleece us to the maximum extent.

A scam typically has four stages, though the last stage is not always used:
  • The Front is the initial contact. This turns a cold call into a prospect who is "qualified", that is, has told the front man of having sufficient funds. The front man is also tasked with weaseling out of us a lot of personal information, to be used in the next step.
  • The Drive persuades a prospect to "invest" or pay for some "benefit". This can be a hard sell or a soft sell, but it'll soon be hard on your bank account! It usually includes lots of grooming and flattery.
  • The Close is the actual transfer of funds.
  • The Load is a follow-up that may lead to even more, often much more, money being transferred. Typically, someone who has just invested will feel great for a few days, and so can be called again with a "new, last minute opportunity" to invest even more. This turns a fleecing into a scalping.
Some telephone boiler rooms (telephones are the weapon of choice these days. Guns and lock picks are so passé) employ enough callers to have specialists in each stage. Other callers can do it all. The process is described in detail in the first 3 chapters, and in the following 7 chapters, describing 7 major cons, each step is explained in context.

The final 3 chapters are titled, "How to Fight Fraud". The trouble is, it is like fighting the reigning heavyweight champ. You, no matter who YOU are, are out of your league. The best we can do is to cut of the Front at the earliest opportunity. Appendix A helps you assess your vulnerability to fraud. Many of the questions relate to practices that make you more likely to get a call, or more likely to answer a questionable ad (and then if you argue with the guy on the phone, he can say, "But you called me!"). If you are never in phone contact, there is no Front!

As to those 5 items above:
  1. Why are older folks targets? We usually have more money, and as we get very old, we are more likely to be lonely or fearful, and the old thinker slows down, a lot.
  2. People who don't know much about money, and are honest with themselves about that, make poor targets. Its the more educated, more sophisticated among us, particularly someone more open to "alternative investments", who are the ripest targets.
  3. If we're scared we'll run out of money, we know we have less time for money to grow because we are using it right now! So we are more open to get-rich-quick schemes. You are more likely to hit the lottery than to get rich on any scheme that starts with a phone call out of the blue.
  4. Are you fearful of "the Market"? Do you think gold, or an oil well, or investing in movie production, or windmills, or (the list is Loooooong!), can make you a mint? Boy, are you ripe for the fleecing!
  5. Because of item #4, do you go to every investment "dinner" you can get to? Your uncertainty and greed are showing. The name lists from such seminars are one of the main sources of target lists bought by boiler rooms trolling for prospects. The more "free" dinners you eat, the more calls you are going to get. Some guy with just the right formula to catch your interest just might take you right to the poor house.
So what can we do? Get on every "do not call" list you can. Several are listed in Appendix B. If your phone doesn't have Caller ID, get one that has it, and has an answering machine. If you don't recognize a phone number, don't answer. The answering machine will either induce the caller to hang up, or it'll give you breathing room to ask yourself, "Do I really want to talk about that, with a total stranger?" And those enticing but all-too-vague ads in the paper or in e-mail? Ignore, ignore, ignore. The less junk mail and spam you read, the better.

Well, if even one person hangs onto life savings, who might have been scammed, this book (and perhaps this post) will have done a good job.

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