Hype Too Good To Be True
There is a very valid old saying that goes something like this: "If something seems too good to be true is probably IS." I would go farther then that to say that if something seems too good to be true then it definitely is not as good as it seems, and most likely is a con or at least some hype trying to influence you into taking the desired action.
Of course there are always questions when it comes to the old 'too good' bit - is it too good to believe in a one-hundred percent return on an investment? Maybe not if you are an insider or have specialized knowledge or abilities to bring to bear - but if the promoters are promising that anyone who invests will get at least twice their input back then you really have to question why if the investment is that good they aren't going to a bank and taking a loan themselves to keep all that profit for themselves!
Using a little common sense seems to be too much to ask for some people however - everyone wants to find that 'get rich quick' scheme that won't take any time or effort or money on their part. They feel that following a preset process and series of instructions should be enough to make them successful, when a little deductive reasoning should make it clear that if that is all that it took then everyone who can read and has ever investigated opportunities on the internet should already be successful themselves. The truth is that hard work and effort are the skills that are necessary no matter what the opportunity - and if you don't have or aren't willing to invest these skills then no matter what you try your hand at you are unlikely to see true success, although some lottery winners and exceptions to the rules do exist and seem to contradict this otherwise solid fact of life!
True Lies
As you probably noticed in the previous section even complete myths and lies can tell us a lot about the people reading and spreading them, but many urban legends and hype or misinformation that exists out there is harder to cull because it contains a kernel of truth buried in the lie. Many times there are scams that are based on people's fear of being scammed to allow someone to access their information or accounts and indeed take advantage of that person. A great rule of thumb everyone should always hold true to is to NEVER click a link in an email from someone you don't know, and to never follow an email link to a website you have to log into, especially if it's a site where you have financial information or access funds. The term used to describe emails and other nefarious methods to try and get information out of you is "Phishing" and it is becoming more and more common.
A very common trick for instance is to send you a notice of an 'unpaid' invoice or worse yet a receipt for some payment supposedly made from your online payment account. The first reaction is of course to follow the link to the item and check on it and the payment in question - but often the link actually directs you to a fake log-in site for your PayPal or bank account designed just to gather any user name or password that you enter to allow the person perpetrating the fraud to gain access to your account and clean you out.
Tricks like these, or "cons" are nothing new - but with the advent of the Internet and high technology the ways that you can be fooled or that a con man can access your personal information have increased ten-fold, and often it is difficult to realize you've been taken until you notice the funds are gone from your accounts!
Some tricks are not even illegal, but just use hype to increase the value of an otherwise worthless entity to allow the supplier to make a profit.
Such is the thinking behind a pump and dump stock scheme - you may have seen emails where a particular stock is being touted and you are encouraged to go to your investment location and buy some shares 'while it is still hot'.
In many cases investigating the stock will show recent and substantial growth - due to the pumping up of the value that the hype of sending these emails and selling stocks to other would-be get rich quick investors are accomplishing.
Once the stock peaks the con man sells all his stock at a substantial profit and walks away while the value plummets.
A friend of mine, an otherwise very intelligent airline pilot in fact fell victim to a similar investment scheme to the tune of tens of thousands of dollars - when he investigated the company sure profits were shown for the past few years, and better then 8% returns were 'guaranteed' for his investment.
Testing the waters he did indeed get almost 9% return on his first investment so he piled in more bucks, and later even more and was shocked to later discover that the lawyer who had been touting and overseeing the company had been fired shortly after his first investment and mismanagement had lost 80% of all the companies assets and funds, save of course those paid to the owners and his family as salaries and bonuses!
Since no criminal charges were filed against the owner either he can't even get a tax break for all those funds he's out … the secret here is that if it sounds too good to be true, even if you know people who can show you that it "is" true at least right now you need to keep an eye or it or better yet invest with a more secure and verifiable fund.
Even if he had left his money in a savings account earning 5% interest he would have done much better then losing all of his capital … but the lure of an almost 3% larger profit then he could get elsewhere was just too great and this otherwise intelligent man bet and lost a sizeable chunk of his retirement all because the hype surrounding the business was just too good to ignore.
The company did exist, it was earning money and for a while the investors were even getting those wonderful 'as promised' 8% returns but like so many things where the hype just is too great to maintain this turned out to be a bust.
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