How to Identify and Avoid Financial Fraud 5.0

Final Episode 5: How to Avoid Financial Fraud

We have come to the final episode of our series on Fraud.

I believe we have covered almost everything there is to know about fraud, why and how it happens in the he least four episodes.

Today, we want to look into the various ways you can protect yourself from or at least minimize the risk of financial scam.

Protecting yourself doesn’t mean you have to get into your shell and stop seeking out new information about investments. Rather, it does mean you should take care to evaluate whether the person giving you the information is trustworthy.

That’s where your real financial intelligence comes into play. Let’s go….

★1. Put your EMOTIONS on check

More people are susceptible to fraud not because of they are stupid but because they have not learned how to control their emotions.

As we once treated in an earlier series, money or the thought of it comes with strong emotions that can make people act irrationally. Greed is one of them.

When you hear of an investment that promises 200% ROI in a few months what is your first instinct?

Do you feel the need to go sell your house and invest immediately or do you activate the rational part of you and begin to ask probing questions?

Don’t be rushed — check it out. Say NO to any salesperson that attempts to pressure you to make an immediate decision.

If you need help on handling your emotions, you can search the group for our previous series on “MONEY AND YOUR EMOTIONS”.

★2. Take Pains to Verify Investment Pitch Claims.

Be wary of unsolicited investment advice. When someone approaches you to make an investment pitch, don’t just take him at his word. Do your homework and research about the company.

Ask, ask and ask again. There is no harm in asking questions. Whoever is selling the product should be able to answer your questions to your satisfaction.

Ask questions, not only from the investor, but also from your Financial advisor, your banker and other people who do not have an interest in the investment.

Check and confirm the investment seller’s company registration with the relevant authorities. Don’t take their word for it.

★3. Never put all your eggs in one basket.

When you eventually make up your mind to invest, don’t yeild to the temptation to empty your life savings no matter the guarantee. Any thing can happen.

I believe you have heard stories of many people who went to the extent of selling their lands and taking bank loans to invest in the MMM Ponzi Scheme. Many are now facing serious depression and hypertension.

★4. Watch your Investments and Verify Them.

If you have your investments with a stockbroker or advisor, you should have a way to verify your investments independently. Don’t rely solely on the reports you get from your advisor. Check your monthly statements carefully and verify any withdrawals made.

★5. Beware of “the Band Wagon Mentality”.

Learn to be suspicious of any investment that tries to persuade you with the narrative that “everybody is into it and are making money” or “if you don’t invest NOW, your future self will not be happy with you” or “by this time next year, you’ll be a millionaire”, etc.

If a claim sounds too good to be true, it probably is not true.

Invest on the merits of an investment and not because everyone is doing it or it is the trendy thing to do.

Who knows? The person trying to convince may be a victim of the saying of “blind leading the blind”. In most cases, they may not know much about what they are investing in. They’re only acting unknowingly as foot soldiers for a potential fraudulent scheme.

★6. Don’t Be Naive, Stay Informed.

Fraudsters are going to target and easily dupe you when you show signs of financial illiteracy and naivety when it comes to money.

That is why I am a strong advocate for investing in your own Financial Intelligence before thinking of giving your money to anyone to invest for you. You need to stay informed of the latest happenings in the financial world and how to stay safe.

Get smart!
There are many forms of financial fraud. Being aware of them can be useful to avoid becoming a victim.

The chances of being taken in a Ponzi scheme are minimal if you only invest with well known and registered companies and brokerages.

★7. Never click on hyperlinks in Spam emails.

Be wary of emails you receive from strangers, unknown sources or from businesses you never subscribed to, especially when they ask you to open an hyperlink and provide your Financial information.

Most times, spammers act as third parties having bought your email from someone else. If you receive spam email, don’t reply. Delete the e-mail and block further messages from that sender.

★8. When You Are Online….

…make sure the websites you visit are safe. Install antivirus and spyware protection on your computers and use very strong, tough-to-crack passwords on all your online accounts and transactions. Don’t write your passwords where it can be easily accessible.

Review your privacy settings on social media websites regularly and report any suspicious activity. Be careful of the information you share on your social media. It is not everything you need to post

Don’t download software from pop-up windows that appear and claim your computer is unsafe. If you click on the link in the pop-up to start the “system scan” or some other program, malicious software known as “malware” could damage your operating system.

★9. NEVER Wire Money to Strangers.

Once you wire cash (especially overseas), it’s virtually impossible to reverse the transaction or trace the money.

★10. Never give out your Financial Information.

There is a common scam is known as phishing, where scammers will email or call you, claiming to be from a retailer, financial institution or government agency. They may say your account has been compromised or needs to be updated.

Don’t reveal sensitive financial information to a person or business you don’t know, whether they reach out to you via phone, text or email. Remember that your bank will never call or SMS you to ask for your credit or debit card details.

★11. Donate Only To Well-known Charities

After a natural or war disaster, fraudsters take advantage of the situation to pose bogus charities to steal money from unsuspecting donors. Don’t fall a victim. Donate only to renowned charitable organizations.

A stranger who calls and asks for money is to be regarded with utmost caution and skepticism. Don’t allow people to take undue advantage of your kindness and courtesy.
In conclusion, I would say that your financial intelligence is not complete without your knowledge of how to protect your wealth from con artists and fraudsters. All your efforts would be gone in moment.

Therefore, it is expedient that you stay informed and keep updating your knowledge on how to stay safe while building your wealth.


That brings us to the end of the FINTEL series we’ve been dwelling on for the past one month. I want to believe you’ve been enlightened and better informed now than when we started.

If you have any questions or contributions, feel free to fire them in the comments below let’s debate. You know I love productive debates ??

If you don’t have any, make use of the SHARE buttons below to make this series available to your friends so they can also benefit from what you’ve learned.

Thank you for reading.

Have a good time steering clear of financial scam.



Time to take the bull of your personal finance by the horns. Have you gotten your sample copy of my book How To Save Like A PRO yet?

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