I live in a Jaipur, which is still not fast paced like Delhi and not dull like a remote land. But last Thursday we all wake with the news – “More than 100 Crore duped from Doctors”. When I read details, I could relate as one of our clients has enquired about the said company, which duped crores from the public. Can someone identify FINANCIAL scams? Well, there are some natural hints that you can use to identify future Financial Fraud.
Can you avoid a Financial Fraud?
Are Financial Scams Planned?
SCAMs are planned. They are not business gone bad! Many of us think its luck or karma behind us. No… someone has ill intention to make fast money, so he is planting a garden in thin air!
Hints to identify Financial SCAMS?
Financial SCAM offers return which is out of the world
A scheme which is intended to fail offers a rate of returns which are mouthwatering. In the Jaipur scam, the doctors were promised Rs 1 lakh every month on Rs 50 lakh deposit.
We all know elementary math. The person is offering 2% a month or 24% a year. The rate of returns works more as returns are being promised on a monthly basis.
We also do not live in cocoons. The largest bank offers 8.5% interest on the deposit. Long term Large Cap returns have been 15%. How on earth any legitimate business can make 24% plus?
Financial SCAMS cite “special business” or “expertise” or “exclusive information”
The scammer will showcase some special business-like share trading algorithms, or real state or mining or expertise like derivative or commodity trading. They will justify the rate of return that is being offered.
They will make their business sound so exclusive that it will look like they are doing charity to include you. It’s a start-up, new innovation, Bitcoins & company funded by Amitabh Bachchan… and what not!
Financial Scams are carried out by brainwashed middleman
The girl associated in Jaipur scam is in her second year of graduation. The influencers who got more referrals got BMWs & Mercs. The middlemen look so happy as if he has found a Messiah.
The reward system is so visible and loud that you will feel uncomfortable. Commissions in range of 6-15% – are they for real?
Middleman/Referrer/Influencer is in your Proximate Group
The recent IMA scam in Bengaluru had majority members from, a specific Religion with a belief that – interest payment is SIN, profit sharing is not!
In Jaipur also, the accused is a Doctor and his majority of his client were doctors. They look so within reach and in real-world that you think – I am losing out, if I don’t invest.
Check for Registrations
We do not live in a hinterland. All advisors, banks, insurance companies, researchers, mutual funds, loan companies, etc are registered under multiple agencies.
The client that asked for my opinion was fully convinced, but I was not just because –
When I asked my client to ask how they are offering such a high rate of returns. The response was
“We have our own mutual fund company, hence we can generate returns better than any MF in India”
Now this made me convince client as I took him to SEBIs intermediary registration page and AMFI (Association of Mutual Funds in India) website that no such member exists.
CLICK TO READ: MUTUAL TAXATION IN INDIA
There are hundreds of checks for someone or a group who are taking deposits from the public. They undergo a big procedure of due diligence before acquiring such a license.
So if someone is claiming he owns something he doesn’t is definitely a fraud.
Convincing or even providing credit to increase your investments
These con-companies know they are a bubble. So they want to garner as much as possible. To increase the investments, they will offer you to take loan. They will refer you to their known bankers & financiers. They will convince you to mortgage or even sell existing assets to increase investments.
Every Bull Run has a side effect – The Scammers Return to dupe people. They thrive because they know people are GREEDY.
Be rational… Let’s discuss in the comments section. Do share your learning if you sensed a scam before it burst.
