Topic: UNVEILING SCAMS

[donlucky]

Hey guys,

I had a compilation of articles that could have helped you understand how to carefully thread on the internet world without getting scammed, but unfortunately it was wiped off by unknown hand.

Anyway, i have decided to bring them all back on this thread.


watch out for them and many newer ones

cheers

[donlucky]

What is A Ponzi scheme?

A Ponzi scheme is a fraudulent investment operation that pays returns to investors out of the money paid by subsequent investors rather than from profit. The term, "Ponzi scheme," is used primarily in the United States, while other English-speaking countries like Naija do not distinguish colloquially between this scheme and other pyramid schemes.

The Ponzi scheme usually offers abnormally high short-term returns in order to entice new investors. The perpetuation of the high returns that a Ponzi scheme advertises and pays requires an ever-increasing flow of money from investors in order to keep the scheme going.

The system is destined to collapse because the earnings, if any, are less than the payments. Usually, the scheme is interrupted by legal authorities before it collapses because a Ponzi scheme is suspected or because the promoter is selling unregistered securities. As more investors become involved, the likelihood of the scheme coming to the attention of authorities increases.


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[donlucky]

Hypothetical example

Suppose an advertisement is placed that promises extraordinary returns on an investment ? for example, 20% on a 30-day contract. The objective is to deceive laypeople who have no in-depth knowledge of finance or financial jargon. Verbal constructions that sound impressive but are essentially meaningless will be used to dazzle investors: terms such as "hedge futures trading," "high-yield investment programs," "offshore investment" might be used. The promoter will then proceed to sell investors--who are essentially victims of a confidence trick--stakes, by taking advantage of a lack of investor knowledge or competence.

Without the benefit of precedent or objective prior information about the investment, only a few investors are tempted, usually for smaller sums. Thirty days later, the investor receives the original capital plus the 20% return. At this point, the investor will have more incentive to put in additional money and, as word begins to spread(investor telling friends of it), other investors grab the "opportunity" to participate, leading to a cascade effect deriving from the promise of extraordinary returns. However, the "return" to the initial investors is being paid out of the investments of new entrants, and not out of profits.

One reason that the scheme initially works so well is that early investors ? those who actually got paid the large returns ? commonly reinvest their money in the scheme (it does, after all, pay out much better than any alternative investment). Thus those running the scheme do not actually have to pay out very much (net) ? they simply have to send statements to investors showing them how much they earned by keeping the money, in order to maintain the deception that the scheme is a fund with high returns.

Promoters also try to minimize withdrawals by offering new plans to investors, often where money is frozen for a longer period of time, in exchange for higher returns. The promoter sees new cash flows as investors are told they could not transfer money from the first plan to the second. If a few investors do wish to withdraw their money in accordance with the terms allowed, the requests are usually promptly processed, which gives the illusion to all other investors that the fund is solvent.

The catch is that at some point one of three things will happen:

   1. The promoters will vanish, taking all the remaining investment money (minus the payouts to investors) with them;

   2. the scheme will collapse under its own weight, as investment slows and the promoters start having problems paying out the promised returns (the higher the returns, the greater the chance of the Ponzi scheme collapsing). Such liquidity crises often trigger panics, as more people start asking for their money, similar to a bank run;

   3. the scheme is exposed because the promoter fails to validate their claims when asked to do so by legal authorities.


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[donlucky]

What is not a Ponzi scheme

A multilevel pyramid scheme is a form of fraud similar in some ways to a Ponzi scheme, relying as it does on a disbelief in financial reality, including the hope of an extremely high rate of return. However, several characteristics distinguish these schemes from Ponzi schemes:
          o In a Ponzi scheme, the schemer acts as a "hub" for the victims, interacting with all of them directly. In a multilevel scheme, those who recruit additional participants benefit directly (in fact, failure to recruit typically means no investment return).

          o A Ponzi scheme claims to rely on some esoteric investment approach, insider connections, etc., and often attracts well-to-do investors; multilevel schemes explicitly claim that new money will be the source of payout for the initial investments.
          o A multilevel scheme is bound to collapse a lot faster, due to the necessity of exponential increases in participants to sustain it. By contrast, Ponzi schemes can survive simply by persuading most existing participants to "reinvest" their money, with a relatively small number of new participants.

    * A bubble. A bubble relies on suspension of disbelief and an expectation of large profits, but it is not the same as a Ponzi scheme. A bubble involves ever-rising (and unsustainable) prices in an open market (be that shares of a stock, housing prices, the price of tulip bulbs, or anything else). As long as buyers are willing to pay ever-increasing prices, sellers can get out with a profit. And there doesn't need to be a schemer behind a bubble. (In fact, a bubble can arise without any fraud at all - for example, housing prices in a local market that rise sharply but eventually drop sharply because of overbuilding.) Bubbles are often said to be based on "greater fool" theory. Although, according to the Austrian Business Cycle Theory, bubbles are caused by expanding the money supply beyond what genuine capital investment supports, and in this case would qualify as a Ponzi scheme, with expanded credit taking the place of an expanded pool of investors.

    * Although non-fraudulent in intent, a pension fund can share some of the characteristics of a Ponzi scheme in that, except during the final period of the fund's life-span, the outgoing cash used in any month to pay pensions is usually taken from the incoming contributions of the active members of the pension scheme. In a year of poor equity returns such as 2008, a pension fund can often perform worse for its members than a Ponzi scheme.

    * Robbing Peter to pay Paul. When debts are due and the money to pay them is lacking, whether because of bad luck or deliberate theft, debtors often make their payments by borrowing or stealing from other investors they have. It does not follow that this is a Ponzi scheme, because from the basic facts set out there is no indication that the lenders were promised unrealistically high rates of return via claims of unusual financial investments. Nor (from these basic facts) is there any indication that the borrower (banker) is progressively increasing the amount of borrowing ("investing") to cover payments to initial investors (as, again, Ponzi was not the first to do).


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[donlucky]

Preventing Credit Card Fraud

Credit card fraud is one of the most common scams in the world. There are several ways to prevent this.

Advice1

1. Always sign your cards, or write ?See I.D? on them; do it as soon as soon as possible.

2. Keep a careful record of your accounts: void incorrect receipts, destroy carbons, save receipts to compare with billing statements, open bills promptly and reconcile accounts monthly.

3. Don?t give out your account number over the phone unless you're making the call to a company you know is reputable; check it out with your local consumer protection office or Better Business Bureau.

4. Do not lend your credit card(s) to anyone.

5. Collect your credit card receipts and keep them secure

6. Never sign a blank receipt, and always draw a line through any blank spaces above the total.

7. Keep your cards separate from your wallet to thwart would-be pickpockets.


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[donlucky]

Advice2.
nline Credit Card Fraud is a major problem for any online business. Savvy Internet scammers have developed many ways to obtain and use credit card information to victimize both the cardholder and Internet businesses. Fortunately there are some ways to mitigate or eliminate the impact of Online Credit Card Fraud. Remember: the best way to guard against Online Credit Card Fraud is simply to get plenty of information and to verify orders with cardholders.

? Use the Phone to Verify Orders: It?s simple and effective.

? International Orders are Red Flags (especially to Nigeria): These are more likely to be fraudulent due to anonymity.

? Be Wary of Rush Orders: Crooks want to get the goods ASAP to prevent detection from legitimate cardholders.

? Take Note of Peculiar Shipping Addresses: Thieves like mail drops they can acquire with false I.D.?s, like private P.O.B.?s.

? Watch Out for Orders From Free E-mail Accounts: Anonymity is the thief?s friend; get more personal info 1st.



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[donlucky]

<b>Types of online fraud</B>

Credit Card Online Fraud

Credit Card online fraud is a very common problem in today?s world. Some people do not bother much about it and for some people it is unavoidable because the con artist is able to gain the confidential credit card information via scam. To some extent the risk of online fraud can be reduced.

? Do not ever allow the card out of your sight

? Check your payment receipt every time and make sure the amount is correct

? Try not to write the pin number anywhere and memorize it well

? Get the card cancelled if misplaced in any case

? Be careful while making big transactions

? Be careful while responding to special offers online

E-mail Online Fraud

E-mail is an inexpensive way and popular method for distributing fraudulent messages, so we should never respond to mails that seek personal information or involves money issues. So to avoid e-mail fraud we can follow some steps:

? Don?t trust mails which say they are from bank

? Don?t trust links in e-mails, they might be fraud

? Don?t respond to mails asking for personal information

? Don?t trust any mails asking for help or charity purposes

? Don?t get trapped in greed factor

Fake Websites

Cyber criminals are spending millions of pounds setting up fake websites that persuade well-established companies seeking their confidential information. So we should avoid:

? Websites not beginning with ?http?, they are not safe

? Do not trust sites which offer big money reward

? Make sure that the site is trust worthy and don?t submit personal information to any flashy site

Lotteries

These scams make us think that we have won a money prize and then they ask us for our personal information regarding our fake winning. We can guess if we are being cheated because:

? You know that u have not participated in any contest, for which they are offering a prize

? You are being asked for any personal information or processing fee

? You are asked for buying low-risk shares for funds

? You are offered bait prizes that are sub-standard

Fake Auctions

Internet is the best option for bidding or selling any stuff but at times it could be very risky. Online fraud auction nearly ranks the top among thousands of online fraud complains. To avoid fake auction results we should:

? Clearly mention when we want our shipment to be delivered

? Study the auction site carefully

? Avoid dealing with unknown sellers

? Consider the method of payment; do not use credit cards

? Know exactly what you are bidding on

No doubt there is tremendous increase in fraudulent online activities but we can always try to move ahead from these sophisticated criminals and prevent online fraud from happening.



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[donlucky]

Avoiding Spam Mails


Spam is more than just an annoyance. Lots of internet scams and frauds us e-mail and spam to fish for potential victims. Getting less spam means being exposed to fewer crooks.

1. Use a decent spam filter.

2. Disposable e-mail addresses are great in-box insulators if you want to keep your real address hidden

3. For merchants and legit others you don't regularly correspond with, use free Web mail accounts with spam filtering built in. You can always abandon it if too much spam gets through.

4. Most Web-based sign-up forms require an e-mail address, but it harms nothing to simply enter an entirely bogus address if you don't want to stay in contact with the site and don't need a confirmation e-mail or tech support.

5. Protect your in-box by only giving your e-mail address to people you expect to correspond with regularly.

6. Never, ever answer spam. Ever. Once they have your address they?ll never stop spamming. Ever. Even in you ask nicely. Most of the time they?re robots anyway.

7. When you do sign up for or buy something online and you have to give out an e-mail address, always opt out of everything you're not absolutely sure you want to receive.

8. Don't post your address on guest books, contact lists, newsgroups, chat rooms, and other web sites, as spammers harvest addresses from these sites. Alternately you can use a Web-mail account or a DEA, or fool the harvesting robots by writing the word ?at? in the address instead of using the ampersand.

9. Make sure you read and fully understand the Privacy Policy and what a Web site promises to do with your e-mail address.

10. Accept the fact that into every life a little spam must fall, and don?t let it drive you crazy.



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[donlucky]

Secure Your Computer

I think everyone should look into protecting their computer from unwanted Spyware and Adware, I recently had major problems with my computer which had me investing in better security for my browsing needs, before I was pretty careless with my online browsing and would visit many sites thinking I was safe, but unknown to me my computer was being infected with unwanted programs, all attaching to my browser.

Spyware and Adware is software made by publishers that allow them to snoop on your browsing activity, and invade your privacy, they flood you with those horrible pop-ups. If you are like most users on the internet chances are, you are probably infected with these applications or you have a good program that protects you already and your computer system is safe.

My computer was pretty badly infected and I got myself a good computer program, and ended all the Spyware and Adware attached to my computer, it was pretty easy to do and I know that my browser has no unwanted guests.

If you want peace of mind and the knowledge that all your personal and sensitive material you have on your computer is safe, then, maybe this is what you are looking for. This is just one option of many out there. If your computer shows signs of being slow and you are being pestered by those horrible pop-up ads and your homepage keeps changing, then maybe it is time that you looked into protecting your computer. Just don't leave it too late when you can so easily fix all your worries with a simple program designed to remove these bothersome Spyware and Adware attachments.


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[donlucky]

The 10 Commandments of Online Security

Although I am working in IT field yet I am bit apprehensive when it comes to transact online. My mother always advises me not to carry out monetary transactions online as there are rampant cases of online frauds. I am well aware of her fears but still I carry out the transactions as they are effortless and very easy. Moreover, there is relatively less loss of cognitive energy when compared to the transaction to be carried out in the physical world.
Although the major fear involved in the online transaction is the loss of money there are other things which need protection, like identity theftm which constitutes a major portion of online theft. The online thieves are everywhere and are looking for anything which can be used or sold. Therefore, in order to avoid it or minimize it (we can't be foolproof) we need to follow some simple steps which will ensure better safety for us and better surfing experience too. Before I enlist the rules I follow to be on the safer side I would like to ask what are we protecting online? Is it our content, money, software or any other kind of intellectual property? No. Though we are protecting it we can do it if we can protect our user name and password. Yes, the most important thing is the login credential of an individual. If we are successful in protecting it then everything else will automatically be protected. I think now I am absolutely clear. So let us start with the rules.

Rule 1 - I will proceed with the transaction only with the trusted sites. This is the foremost and the most important point. Sometimes what hackers do is that they spoof the web address of the website and we access the spoof and enter the confidential information which is directed straight towards the hacker. In technical terms, it is known as 'Phishing'. In order to avoid this type of attack always remember to click the padlock icon at the right bottom corner of the browser and check the certificate which is issued to the website by the Certified Authority.

Rule 2 - I will ensure that my identity is passed through HTTPS protocol. Here I would like to talk a bit about encryption. Encryption is a process by which simple text is transformed into unreadable text also known as cipher text. Actually when we send data via HTTP then it is easy for the hackers to capture the text and read it, but, when we are using the HTTPS protocol, the data being send is not possible to comprehend as it is encrypted. Therefore, always look for the HTTPS sites as they are far more secured.

Rule 3 - I will use the public computer cautiously. This is the most dangerous place to carry out any kind of transaction online. Most of these computers are on an un-trusted network and anyone's identity can be easily compromised. What if the public computer has some spyware like Keylogger to record the keystrokes as we type? Therefore, never use a public computer for exchanging sensitive information. Moreover, as an extra step for safety, we can delete the cache and other private files from the browser and history of the computer.

Rule 4 - I will use the virtual credit card for online shopping. This is an essential step. Suppose I do a lot of shopping online and have to reveal the credit card credentials every now and then so there is a danger of it being misused. Once it gets into the wrong hands, I will in deep trouble. Therefore, it is better to get virtual cards issued from the bank which carry pre-decided amount and the best part is that these are only for one time use and not for repeated use.

Rule 5 - I will not pay heed to the mails and attachments received from anonymous addresses as they may contain 'Trojans' and will send out the confidential information from my computer to the hacker's den.

Rule 6 - I will keep changing my password and will never write them anywhere. As the saying goes, "Change is the only thing permanent". This means everything is temporary, even your password. Keep updating your password or else you are making your account more and more vulnerable. Also never write them anywhere for your reference. If your reference falls in the wrong hands then your security will be compromised. Also try to use different passwords for all the accounts.

Rule 7 - I will create complex passwords. Not only hackers but anyone close to you can get an idea about your password if you create passwords which are related your name, family, birth date or any other related thing. Even if you are creating these types of passwords then be sure to use some special characters like hyphen, under score, ampersand, exclamation mark etc. Never use password that is related to the account or user name. This is the most common mistake committed by the majority of people.

Rule 8 - I will always use an anti-virus and regularly update it. Anti-virus software is an important tool to fight viruses and worms who are trying to infect our computer. Regularly updating the software is also an important task as every now and then new viruses are being created and in order to terminate them we need to be loaded with the new virus definitions.

Rule 9 - I will keep my browser up to date. No one is perfect not even your browser. There are many security issues involved. Hackers are working everyday to create something new with which they can breach the security, therefore, we need to keep track of such threats. We must always keep our browser updated as it is an interface using which hackers can easily gain access to our computer. We must update our browsers as and when required so as to fix some bugs or install new features.

Rule 10 - I will never forget to logout and then close the browser window. In case of those web sites that use cookies to track sessions, when the user logs out, session-only cookies from that site will usually be deleted from the user's computer. In addition, the server invalidates any associations with the session, making any session-handle in the user's cookie store useless. This feature comes in handy if the user is using a public computer. As a security precaution, one should not rely on implicit means of logging out of a system, especially not on a public computer; instead one should explicitly log out and wait for the confirmation that this request has taken place.
The rules above are quite simple but very important to be followed. One must always stick to these rules thereby ensuring his/her online security and integrity.


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