Barefoot Investor: Beware of life’s wheelers and dealers

After inviting readers to open up about being scammed, the Barefoot Investor received a raft of stories involving guilt, shame, and threats of humiliation. So this week’s financial lessons come from the questions, not the answers.

Beware: Scammers are everywhere.

My email inbox has been a white hot mess for the past few weeks.

See, two weeks ago I wrote about a bloke who got stung to the tune of $28,000 by a mob called Bitcoin Profits.

And, as an afterthought, I invited readers to share their stories of being scammed.

Holy Bitcoin!

The sheer number of responses I received (and I’m still receiving) has been absolutely mind-boggling.

After all, these are people who are replying to a finance columnist … it’s not like they’re reading TV Week!

Still, the stories you’re about to read are better than any reality television show: they involve guilt, shame, and threats of humiliation (oh, and plenty of people getting screwed, too).

So just for this week everything is upside down:

It’s usually my answers where the learning happens, yet today the lessons come from the questions …

Tread Your Own Path!

Scammers work on the premise that victims will be too embarrassed to reveal they have been duped.

Q&As

THE DAY MY DAD GOT A VIRAL STD

SOPHIE ASKS: Recently I noticed my elderly father had gone downhill.

He was very quiet and was looking a bit depressed.

When I asked him what was up, he told me that he was on a website he ‘probably shouldn’t have been’ on when the screen started to flash “YOUR COMPUTER HAS BEEN INFECTED WITH A VIRUS — DO NOT SHUT DOWN AS YOU WILL DAMAGE YOUR COMPUTER PERMANENTLY”.

He was directed to ring an overseas number to remove the virus.

When he rang, they sounded professional and said they could certainly help him.

He gave them remote access to his computer and requested his credit card.

They charged him around $800 for the ‘virus removal’ and a further $1200 for ‘repairs’.

Naturally, he was distressed. The next day on reflection he decided to cancel his credit card.

For a couple of days thereafter he was suffering from guilt and worry about any further money he might lose.

Luckily, Commbank were great — they got the bogus charges refunded and gave him a new credit card.

We also got his computer checked over.

I always feel sorry for the oldies that don’t have someone to protect them.

BAREFOOT REPLIES: I wonder what website he was on that he ‘probably shouldn’t have been?’

Maybe collingwoodfc.com.au?

Though on second thoughts, I reckon he was looking at birds … but maybe not magpies.

I included this question because of the sheer number of people who wrote to me who had been caught out on similar websites.

(Another version of this scam happens via email, where you’re instructed to deposit a substantial amount of money to a bitcoin account within 35 days or they would release video of you watching porn, to your entire contacts list).

This scam exploits the emotion of shame and humiliation.

The scammers hope you’ll pay the money, and never speak about it again, which I assume some people do.

After all, can you imagine how embarrassing it would be to tell your daughter you’re a Collingwood supporter?

Vulnerable investors must beware of the ‘double rip’ scam.

THE DOUBLE RIP

DENNIS ASKS: I need you to look into a company for me.

I am 62 years old and had recently retired and had withdrawn my Superannuation.

I was on the phone talking with a “Financial Adviser” from a company called TradeMote, who had been featured in a Facebook video.

It was of an interview on Sunrise (Channel 7) with an average bloke who happened to invest in a Bitcoin company and in a very short time had amassed a small fortune.

So I joined up. And in a very short time, the investment she required from me turned to $5000 to “secure” my position.

A few days later another $5000 was required to “secure” my position, and then another $20,000.

I was able to log on to my TradeMote account and saw how fast the account was growing.

When I tried to transfer the funds my bank (Westpac) contacted me and said they weren’t going to allow the transfer as the account I was transferring to was on their ‘watch list’.

So I stopped answering their calls and in a very short time my account was drained to virtually zero!

A few days ago I was contacted by another adviser who said he was concerned that I had lost that money and for an investment of $10,000 to $20,000 he would work to get my money back.

I haven’t been able to find this company on any scam lists but their website certainly looks real?

If you can check this company out I would be very grateful.

BAREFOOT REPLIES: The number of people who contacted me in a similar situation to Dennis was frightening.

I call this scam the ‘double rip’: The same scammers contact the victim (posing as a different company) and offer to help get their money back … as long as they deposit more money.

Another version of this is where the victims are contacted by official sounding lawyers (also the same scammers) who say they are conducting a class action on behalf of victims, and they require seed funding to take them on and get back their money.

This scam works because they’re targeting victims that are easy targets (they’ve already been duped once), and in many cases they’re highly emotional and are intent on chasing their painful losses.

A Tony Robbins motivational seminar may have opened the door to a scam for one reader.

MOTIVATIONAL MISFIRE

LISA ASKS: I went to a Tony Robbins motivational seminar.

What I didn’t know was that prior to the main show there was a great deal of, let’s say, warm-up speakers, talking fluff about how to get rich.

One of the guys was selling a share trading program.

He had a very impressive style, and was very amiable, very charismatic … but I wasn’t buying it!

Still, I was bored waiting — so I thought, what the hell.

I put my hand up as being interested and went to the back of the room to listen to his spiel.

I must admit, what he said got my attention.

He said he was selling his share trading system for a good cause: to help build homes for poor people affected by a tsunami.

I watched, I listened, I questioned, I doubted, and then I thought … I can do this! I can make this work! (Even though I knew Scott Pape would say “NO!”).

But I knew me and I was dog determined to make it work.

So I paid him $20,000 for his trading package and got down to it.

I invested extra into a trading account, and paid to fly to Sydney to go to live trade events. And I invested copious amounts of time. I’m still up at 1am, still watching the market, still feeling excited. And I am still waiting to see my return.

I read your stuff, I read their stuff, I read loads of information.

Guess what? I am still down $20k … and you know what, I am grateful for the experience.

BAREFOOT REPLIES:

Why would Lisa say that she’s ‘grateful for the experience’ … of dusting twenty grand?

It almost sounds like she’s been kidnapped into some sort of cult!

Actually, that’s kind of what has happened.

Lisa has Stockholm syndrome (definition: “Feelings of trust or affection felt in many cases of kidnapping or hostage-taking by a victim towards a captor”).

The guru has worked hard to get Lisa to buy into the reality that she’s going to get rich.

The gold-plated guru says the only thing stopping her living this amazing life is knowledge.

And only he has that knowledge … yet he’s willing to do her a favour and sell it to her for $20,000.

So if the trading program doesn’t work, it’s the guru’s problem right?

Wrong.

The guru can only do so much.

Lisa needs to work for it and prove it to herself.

However, it may well be that Lisa requires even more knowledge from the kind caring guru … like attending his high priced live trading events.

The Barefoot Investor: The Only Money Guide You’ll Ever Need (Wiley), RRP $29.95

If you have a burning money question, go to barefootinvestor.com and #askbarefoot

The Barefoot Investor holds an Australian Financial Services Licence (302081).
This is general advice only. It should not replace individual, independent, personal financial advice.

Originally published as Barefoot Investor: Beware of life’s wheelers and dealers