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This guide helps you to understand scams on platforms or services and how to avoid them.
Here are some common ones I've seen online:
1. Ponzi Scheme:
This is a type of Investment Fraud that promises high returns to investors with very low risk or no risk involved, they get investment by telling the investors their fake business model which will always be profitable.
In this scam the early investors get their profits by using new investors money, the scam keeps running as long as the scammers are successfully getting to scam more people or introduce their scheme to more investors, once the influx of money from new investors stops the whole scheme falls. And most people will lose their investments, the early investors may make good profits from it but the majority of them will lose.
How does it work?
The scammers try to introduce their scheme to new people by using social media platforms, paid advertising, etc. they promise high returns that can be 50%, 100% or a little more than what others are giving,
They may introduce their fake business model like cloud mining which will be always profitable because they successfully mine 10 blocks a day, or they have a team of professional traders and shows their PNL or says they have build a bot using AI, machine learning that make them 100% profits every day.
After getting some early investors they introduce their schemes to more people, then the early investors successfully get their returns which is from new victims of the scheme, in this phase everything looks Okay and profitable. But in reality the victims don't know what is happening on the other side.
Ponzi scheme operate smoothly as long as the scammers are able to successfully get new investors to invest, once the scammers struggle to bring in new investors, and simultaneously earlier investors start trying to cash out but can't, the whole scheme collapses.
In some cases the online platforms tweak their terms and conditions stating, - to withdraw your investments you need to have 5/10 active referrals. Which helps the ponzi scheme to run some more days or months because some more people will get introduced to the scheme. But eventually this scheme falls leaving the majority of people in loss.
How to stay away from it?
- I would say that wherever you see unusually high returns then skip it, never look at it and research about it more, because the scammers introduce their scheme so convincingly that we cannot resist ourselves to be a part of, sometimes…..!
- If you find a good ROI then research about the platform on reviews sites, start by reading the low star reviews first, because they mostly seem genuine. And if the site is a scam then you will see a lot of people reviewing it as a scam.
- Look on their website and their team if they are real people by researching their LinkedIn, social media, etc. in crypto space the socials will be unavailable most of the time so skip that platform because those are obvious scams most of the time.
2. Romance Scam:
This is a slow process of scamming.
Scammers use fake dating profiles, fake social media of the victim's opposite sex. First they try to start a conversation like an intro making an excuse of their cousin also having the same name so they thought you were him/her.
And when time passes they try to make relationships with the victim, and introduce the victim to trading, crypto, forex. And convince them to invest on their fake platform introducing how they made huge profits.
How does this work?
The scammers introduce themselves using fake social media, and they try to play with your emotions by asking questions like hobbies, education, etc. they seems like real people at first,
They share personal incidents, what they are doing at the moment, etc. type of images.
After a long time, building a connection with the victim they try to introduce them to crypto or forex trading or something similar.
They prove that they have made good profit by trading/investing at a specific platform.
Then they convince the victim to deposit on that platform which is an exchange or broker which is fake and developed by scammers to scam.
They may tell the victim that they get insider news from a uncle/anyone from that she/he can make good profits daily.
At first the platform may give a withdrawal for a small amount but when the victim invests something significant, the scammers run away with the money.
How to Spot and Avoid these types of scam?
- You will be contacted first by the scammer, using any type of excuse like they got your profile/contact from a friend, they were trying to contact another person, etc.
- They will always seem to be online and always reply very soon to you with any query or message.
- Ask them to video call
- Their pictures on their socials will look like models or very attractive pictures. which are copied from other people profiles or stock images
- They will always try to motivate you and cheer you up in any situation.
- Always look for reviews of any platform you are trying to make an account with. Research in depth about that platform like their location, their team, their linkedin, look at their partner company’s social posts - because there will always be a social media post if the company partners with some other company, etc.
- Do not pay anything first like account opening charges, fee for verification etc.
3. Job Scam:
I found most of these types of scams on discord and telegram channels. Scammers post job listings/ads on Facebook job groups, telegram channels, discord servers for a job where they need many employees/freelancers for basic tasks. Such as data entry, converting text on images to pdf, Copy pasting, etc. by promising unusually high salary. But in the end they charge a fee for making Job IDs, Fee for application process, etc.
How to Identify these types of scams?
You will find similar job postings when researching their FB profile, posts like basic tasks, basic copy paste job, no experience needed, etc.
These scams let you start working immediately like no interviews, no asking for qualifications.
The job listings will be by a person without any connection. In case they provide the company name then research about them see the profile of the person/employee on their company linkedin match with the jos poster or not.
They will promise high payment like $500 for 1-2 hr per day. These are really very vague claims but some people fall for these obvious scams too.
How to stay away from it?
- Avoid paying for getting the job, you can be asked to pay for anything and any amount. Legitimate employers do not charge fees for employment.
- Stay away from basic no skills required jobs, that pays unusually high amount.
- Stay away from basic no skills required jobs, that pays unusually high amount.
- They have crypto as a payment method.
4. Phishing scams:
These scams involve scammers attempting to obtain your sensitive information such as passwords, credit card details, and private keys by using fake platforms or urls that look like legitimate ones. Once you enter your data there, your account may be hacked or your wallet wiped.
How does this scam work?
In this type of scam there are no big claims, no big promises, no charges, no fees.
They try to just gather your personal info like the password of a platform, private key of crypto wallet, Social account details, etc.
In most cases they try to gather this info by using similar links and interfaces of the original platforms or websites.
Here is an example of an phishing attack to understand about it:
The victim is contacted with an email saying that the victim has been chosen as a winner of a giveaway, in which he didn’t even participate. When seeing the $ sign and 4 zeros after a number the victim’s mind stopped thinking and he clicked the link, which maybe a hyperlink or a link seems similar to metamask. Like this 'metamosk.io'.
Then he got redirected to a platform which looks exactly like metamask where he needs to enter the private key believing its required to claim the reward and get scammed. Then they check their browser history and figure that it was a phishing link.
Recently I got a phishing link that was asking for my twitter password to be able to see the account activities. I get daily some DM's on twitter and i didn't Even posted on that account.
How to spot and stay away from phishing attacks?
- Always use 2fa security on websites, like a confirmation email when someone tries to sign in with a different ip, or use google authenticator 2fa, etc.
- Always check what url you will be redirected to: To Check that you can copy the hyperlink and paste it to a notepad for checking if it's a real website or not. For pc just hover over the hyperlink you will see the redirecting url on the left corner of the browser window.
- Do not fall for free stuff like giveaways.
- Always use a different browser profile for finance related sites like banking sites, exchanges, etc.
I came across these scams i thought it would be helpful if someone is new and just getting started here, but after pasting the post from my notepad it got really very long.
