There's no shortage of people offering to show you "how to get rich quick". They're on every platform, spanning many media. They existed before the Internet or television and infomercials did, even before the "Classified Ads" sections in newspapers. Every generation and decade has/had its own version(s) of scammers. (More on that later.)

"What's there to think about? There's no quicker road to mediocrity than procrastination and indecision!"

So they may proclaim when you express doubt or reluctance. The setting and finer details might change, but the pitch is always the same, since there are always people whom will be duped by their antics.

Since money (or at least Capitalism) first existed, financial scams have been making people into millionaires. (However, those millionaires are the scammers, not the people who fall for the "get rich quick" scams and get taken for a joyride.) The real question isn't, "How do I get rich quick?", but "Why do people keep falling for scams?". The answer isn't straight-forward, but the short answer is that some of us are more gullible and trusting than others. However, a world in which nobody trusts anybody else is not a world in which it's worth living. (For the longer version, read Stephen Greenspan's the Annals of Gullibility.)

The golden rule, of course, is that if it seems too good to be true, it most likely is. If the "deal" requires you to pay money to get more money later, it's a scam. (If you have to pay money to keep your money safe and earn interest on it, it's probably a bank.) If you have to pay money to buy "training materials" for an employment opportunity, it's a scam (or a for-profit college/university).

Fake Bonds and Land Certificates: His Highness Gregor, Caçique of Poryais

As early as 1821, General Gregor MacGregor was kicking about in Central America. On returning to the UK, he was granted/claimed the title "His Highness Gregor, Caçique of Poryais". MacGregor arrived in London with "an opportunity of a lifetime": Purchase of land ownership certificates in the country of Poryais. You know the deal, rivers of gold and abundantly fertile soil with preposterously high yields. He set up an office in London, wrote the Poryais national anthem and exchanged British pounds for Poryais dollars and land. McGregor raised about twenty million pounds for this venture. That was all well and good, except for one key detail: Poryais didn't exist as anything except a figment of McGregor's imagination. What did exist was a patch of uninhabited jungle on the border of Honduras and Nicaragua, as many of the adventurers who went to claim "their" land soon found.

Types of Financial Scams

In this post, I'm going to outline a number of financial scams, with brief points on how they work and how they fail.

Advance Fee Scam

• The victim is usually approached in a letter/email from a supposedly wealthy person (typically a non-existent "Nigerian prince") in a bit of a bind that requires money to resolve.
• The victim is promised considerable financial compensation for their help.
• The victim pays a small amount up front for covering "exchange", "handling" or "processing" fees.
• The victim also provides their banking details, for the amount to be paid to them.
• Unsurprisingly, the compensation amount never arrives.

How it Fails

• The potential victim realises that the supposed Nigerian prince doesn't exist or isn't actually in a bind.
• The potential victim refuses to provide financial aid to a stranger.

Pump and Dump

If you've spent any time in the cryptosphere (which I assume you have, since you're reading this), this one should be familiar to you. This happens a lot with fake cryptocurrencies (typically those that are mostly spin and little else.)

• It's slightly more complicated than an advance fee scam.
• A Pump and Dump happens within minutes to an hour.
• The scammer (maybe an influencer) persuades people to invest in or purchase something that is worthless or near to it (such as Squid Game Token or Crypto Zoo), pushing up the price.
• Other people notice the rising price and purchase the item or stock therein.
• When the price reaches its peak, the scammer dumps all their stock in one go, causing investors to do the same.
• The price plummets to zero, netting the scammer a big chunk of money from all the investments that pushed up the price.

How it Fails

• YDOR and read whitepapers, instead of getting FOMO and letting your emotions get the better of you.
• You don't buy sketchy-looking crypto. (Ones that don't have whitepapers are a glaring red flag.)
• If you do buy, you buy the dip/drop, not the peak.

Ponzi

Many people have at least heard of a Ponzi Scheme (named after Charles Ponzi, who ran one circa 1920), since many legit cryptocurrencies are accused of being Ponzi schemes. Another infamous runner of a Ponzi Scheme was Bernard Madoff (whom made off with millions and was sentenced to one hundred and fifty years in prison for his crime).

• A well-organised Ponzi scheme can last for years, as long as it keeps attracting victims.
• The scheme usually promises to "double your money" in X many days/weeks/months.
• Early investors get paid, if at all, with money taken from new investors (borrowing from Peter to pay Paul).

How it Fails

• Too many investors want to take out their money within short succession. Suddenly, there's not enough money to go around.
• Early investors and/or the scammer fail(s) to get more people to invest in the scam.

Warning: Any "crypto doubler" site or offer you see (especially if marketed on social media) is likely a Ponzi scheme, if not a straight-up rug pull. Any staking service that offers you a high APY (more than 30%) is also likely to be a scam (especially if you are required to stake for more than several months before receiving rewards).

Pyramid

Often confused with a Ponzi scheme, a pyramid scheme is different.

• Here, Peter gets paid a percentage if he convinces Paul and John to join. He also gets paid a (smaller) percentage if Paul or John convinces Mark and Luke to join.
• Whomever convinced Mark and Luke to join will get paid a percentage as well.

How it Fails

• The scammer fails to convince Peter to join.
• Peter joins, but fails to convince Paul and/or John to join.

Multilevel Marketing (MLM) or Network Marketing

This one is a form of Pyramid scheme, with a twist.

• This is a pyramid scheme that sells a cheap/inexpensive/low-quality product or set thereof.
• People in the pyramid get a cut if they convince others to join.
• Members also get a cut for selling the product(s) to potential joiners and/or outside buyers.
• Because there are products and outside buyers involved, this scam is considered legal in some countries.

How it Fails

• The scammer and/or Peter fails to sell products to Paul and John
• The scammer and/or Peter fails to recruit Paul and John

Coaching "Services"

• A victim pays money for progressively more expensive lesson bundles that promise to teach a skill or set thereof (such as how to get rich quick or learn how to flip products on Amazon).
• The course mostly fails to deliver on the promise
• The marketing consists of compelling "rags to riches" stories and fake testimonials from supposed past students.
• They create a false sense of urgency to fill limited positions.

How it Fails

• You don't buy questionable content from shady characters on TV or the Internet.
• You buy online courses from reputable sites like Udemy and Skillshare or from established colleges/universities.

Fake Crypto

• A fake (or no) Initial Public Offering (IPO)
• Airdrops that never happen
• A charismatic leader spinning a yarn that touts the benefits of their "cryptocurrency"
• When under scrutiny, insist that the scam isn't a scam
• When the whole thing falls flat, disappear.
• Investors can't withdraw or exchange their supposed coins or tokens.

How it Fails

• DYOR and read whitepapers. The lack of a whitepaper is a red flag, as is not finding an exchange that supports the crypto in question.
• Don't invest anything you're not prepared to lose.

Warning: To the best of my knowledge, Pi Network is a scam, as were One Coin (circa 2015-2017) and BitConnect Coin (BCC).

Conclusion

In short, stay safe out there, cryptonaughts! The Cryptosphere is like the Wild West with its share of snake oil salesmen. DYOR, read whitepapers and don't get FOMO. Don't invest anything you're not prepared to lose. Remember that you, too, could get scammed, no matter how smart you think you are. (Even Stephen Greenspan, the author of the Annals of Gullibility, got scammed out of his savings, by Bernard Madoff.)

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Post photo: Charles Ponzi, Copyright CNN