If it looks too good to be true, it probably is

If you own a mobile phone or have an email address, chances are you’ve received the wonderful news that you’ve either inherited a fortune from an unknown relative, won the lottery (without buying a lottery ticket), or can make millions working from home for a mere two hours a day.

COVID-19 has throttled South Africa’s economy. Many consumers are under severe pressure and more easily tempted to see a promise of extra cash or big savings as a lucky break - to their detriment.

The saying “Easy come. Easy go” draws on the old adage that if a deal sounds too good to be true, it probably is. This however remains one of the best pieces of advice consumers can use to guard against confidence tricksters and their scams, which have proliferated in the past few weeks.

Tough times, healthy scepticism

The proliferation of get-rich-quick scams comes against the backdrop of tough economic times and indications that conditions will worsen in the months to come. 

This is all the more reason why South Africans should take promises of overnight riches with a generous pinch of salt. This healthy scepticism should be exercised in the case of advance-fee schemes where people are persuaded to hand over their hard-earned cash to secure a place on a company intern or training programme - a tactic that is becoming more and more common as con artists exploit jobseekers’ hopes and fears.

Fraudsters often pose as the representatives of big, trusted companies to give their schemes a veneer of plausibility. The reality is simple: Reputable companies will not ask jobseekers to pay to secure an internship or join a company training initiative.

Loan sharks lurk

As for illegal moneylenders, otherwise known as loan sharks - it’s likely that the worsening economic climate has brought them out in full force.  Unscrupulous micro-lending thrives when people are over-indebted or struggling to make ends meet, making them more inclined to grab at straws that offer a chance of keeping their heads above water.

One way that consumers can protect themselves is to ensure that they are dealing with established, financial advisors who are registered with or licensed by the Financial Services Board (FSB).

If a consumer needs to borrow money, it must be from a company that is registered as an accredited financial services provider and deposit taking institution in terms of the Banks Act.

To check whether you are giving your money to an accredited services provider, contact the Financial Services Board Fraud and Ethics Hotline on 0800 313626 or visit the SARB website on www.resbank.co.za for more information.

Protection against abuse

Registered providers such as banks are committed to acting correctly and treating customers fairly and take every opportunity to entrench the requirements of the National Credit Act (NCA) in all their lending requirements.  

Consumers must remain vigilant and cautious, so they don’t get scammed by dodgy moneylenders and less-than-scrupulous operators of get-rich-quick schemes.

Here are a few points to keep in mind when confronted with what looks like a bargain or lifeline but might be anything but:

• Do your homework. Check that a financial service provider or investment company is registered. If you are being promised incredible returns on an investment or made promises that will make you wealthy in a very short period, don’t believe it without doing the necessary checking and ensure all your questions are answered satisfactorily.
• Be wary when offered a business opportunity where you have to recruit others to be paid or receive a benefit. Also beware of a “secret investment formula” that will only be shared with a select group of investors.
• Don’t give in to pressure to make a snap decision to invest your money.
• Don’t believe “first-hand stories and anecdotes” of successful investors; they are most probably being paid by the dodgy company.
• Never share your personal details and look out for spelling or grammatical errors in email or text messages from anyone contacting you with an offer that sounds too good to be true. Unprofessional communication, such as long rambling messages, is also a sign that all may not be what it seems.

Above all, realise there is no quick buck or a magic fix to your money woes. Use your common sense and good judgment when such promises are made to you - and remember the old adage about money-making offers that look too good to be true. It probably is.