“It is possible that the scrupulously honest man may not grow rich so fast as the unscrupulous and dishonest one; but the success will be of a truer kind, earned without fraud or injustice.” – Samuel Smiles

It is easy to assume that only a particular type of individual is caught by fraudulent schemes (and this might be true to a certain extent). It is also commonly believed that most security measures currently adopted by online financial houses are strong enough to deter the most talented hackers.  However, both of these statements are based on a simplified view of how the Internet and the online financial trading space work.

In essence, the following truths about fraudulent schemes and scams apply:

  • Anyone can get caught by an online scam. We are all so busy that it’s a simple matter to be caught unawares in a moment of inattention. We do not have to be of a certain intelligence level or age to get caught in a scam (or to avoid a fraudulent scheme).
  • Breaking into secure networks and online trading platforms are not the only level at which fraudsters operate. They operate at all levels including sending spam emails, creating fraudulent online trading companies, and spreading falsified information on discussion forums and message boards.
  • Greed drives fraud. The quotation mentioned above by Samuel Smiles notes that being scrupulously honest will not lead to instant riches.

Tips to help you determine whether you have been caught in a scam or not

It is surprisingly easy to get caught in a scam, or a fraudulent scheme. However, it makes sense to do the best you can to stay away from scammers, hackers and fraudsters. Unfortunately, as described above, this is not always possible.

Therefore, here are some tips to help you ascertain whether you are either about to get involved in a fraudulent system or have been involved in a scam so you can extricate yourself as soon as possible with the least financial (and reputational) damage to yourself.

“Get rich quick” schemes

The fact of the matter is that there is no easy money. And anyone who promises substantial returns in a very short space of time without extreme levels of risk involved is either uninformed or running a scam.

This fact is emphasised by reiterating the quotation mentioned above by Samuel Smiles.

Therefore, websites that promise high returns and low risk when you invest in a short-term trading strategy programme are most likely fraudulent. The reality is that you are more likely to lose your initial investment (and more) than you are to make the promised profit.

Phishing communications

Succinctly stated: “Phishing is the fraudulent attempt to obtain sensitive information such as usernames, passwords, and credit card details (and money), often for malicious reasons, by disguising as a trustworthy entity in an electronic communication [such as email].”

Some of the most common phishing emails are from individuals pretending to represent your bank or financial investment house with the aim of directing you to a fraudulent version of their website asking you to enter your personal information. Thereby, allowing the fraudster to gain access to your account and to withdraw your investment.

Unfortunately, time plays a huge role in this situation. The apparent response to such an attack is to contact your broker (or bank) and to freeze your account and to change your online access details. However, it’s often too late. By the time you have realised that you have been caught in a phishing scam, your money has already been withdrawn from your account.

Unsecured websites

HTTPS (Hyper Text Transport Protocol Secure) ensures that all data sent between your browser and the website is encrypted. It is the secure version of HTTP.  All websites like online trading platforms, banks, and eCommerce sites will use the HTTPS protocol as a basis for their platforms so that your data is sent securely between your web browser and the company’s website.

Therefore, before you open a website check that the URL (address) starts with https:// and not http://. In this way, you will prevent identity theft. Additionally, if you are asked to send money to a website whose address does not start with https://, then you know that it is a fraudulent site.

Finally, if you have already sent money to a company via an http:// address, its highly likely that you have been caught in a scam.