As the economy worsens, more and more financial swindles will be exposed. We show you how to spot the tell-tale signs of a scam.
Having been a money writer for six years, each week I receive hundreds of emails from dozens of different financial websites and companies. Recently one arrived in my inbox which looked suspicious.
It was promoting a land investment scheme where you could buy parcels of land in the South East of England for £10,000+. The email explained that land has been one of the best investments over the last 20 years and argued that an acute shortage of residential land in the South East offers an historic opportunity to investors.
Trouble is, property prices are crashing across the UK, and look set to carry on falling for a while yet. What’s more, the email doesn’t say whether planning permission has been granted to build homes on this land. If planning permission is never granted, the value of this land will almost certainly never soar.
On top of all that, the company behind this email was incorporated less than eight weeks ago, yet the email talks about ‘our latest project.’ The company’s website was also created on the same day and registered to a holding company at a London address used by dozens of similar businesses. Alas, this has the hallmarks of what’s known as a ‘land-banking scam’.
Now, it’s possible that I could be wrong and the email came from a legitimate company. But even if that’s the case, I wouldn’t invest. Buying tiny plots of green-belt land in southern England is not the way to go about building a property empire.
Scam spotting
So how can you make sure you don’t put money in a scam? Well in my new book on money management, I list no fewer than 22 different scams which have some or all of the following features:
1. They usually arrive unsolicited.
2. They ask for money upfront in return for a bumper payout in the (unspecified) future.
3. They promise super-high returns, far greater than the 3% you could earn in a top savings account.
4. They fail to explain how these handsome returns will be produced.
5. They claim secret, specialized or inside knowledge.
6. They promote the lure of huge profits for little effort.
7. They rely on bringing in more and more punters in order to keep the game going.
8. They don’t explain why you personally have been singled out for this once-in-a-lifetime opportunity.
As always, if something looks too good to be true, then it almost always is. If you have any doubts whatsoever about an investment opportunity, then keep your money firmly in your pocket. Even better, consult a reputable solicitor or fee-charging independent financial adviser before entering into any major financial commitment. Otherwise, you could end up feeling both very broke and very daft!
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