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Why Do Singaporeans Still Continue Getting Conned By These Scams

It’s time to educate yourself and avoid falling for such scams.

Fool me once, shame on you. Fool me twice, shame on me.

This is a phrase that Singaporeans should be reminded of if we want to do our part to help reduce the number of scams that have been going around in our country.

Last week, we read reports about the latest scam that have surfaced in Singapore. This time, it was a diamond scam operated by Asia Fine Diamonds. The company scam started in June 2015 with the company closing their office in January 2016. It did pretty badly, even for a scam.

Time and time again, the same old trick is employed, and worked, which in turn explained why it is employed again. And this ridiculous cycle will continue until we decide to do something to eradicate it.

Some people believe that keeping the lookout for scam is the job of the government. Maybe MAS. But should it really be? Aside from putting companies on a watchlist, which only happens after complains had been made and money had been lost, what else can MAS really do? They can’t possibly afford the manpower to investigate every new company that gets created each day and to question their business model.

Read Also: 3 Recent Investment Scams In Singapore

Education – The Solution

Nelson Mandela once said, “education is the most powerful weapon you can use to change the world.” This really holds true when it comes to personal financial literacy. If people in Singapore were just a little more educated when it comes to financial matter, we would be able to weave out the effectiveness of such scams in our society.

More often than not, it is not difficult to identify a scam. Here are some sure ways of knowing if you are looking at a scam.

Free Gift For Attending A Seminar

If you are given something free for coming to a “talk”, expect the possibility that whatever that is being sold to you is unlikely to be that great. The only reason why the company is willing to cover the cost of the gift is because they know there is a good probability of them being able to make so much more from the people who attend their talk.

We are not saying that all talks are bad. But it does not cost you anything to keep your guard up and to bring a dose of scepticism when you are attending them. If you are not comfortable with what you are hearing, you should always say “no”.

Ridiculously High Returns

If you are someone who is currently looking for a simple way to get high returns while taking no risk, nor wanting to educate yourself during the process, guess what? There are products for you out there.

And they are called scams.

If you insist these are the products you want, chances are you will become a victim of them one of these days. Unless you start educating yourself today.

Working Model Of Common Scams

Fortunately for us, most scam artists are not that clever, nor that hardworking. Famous scam artists such as Frank Abagnale, Bernard Madoff and Charles Ponzi are the exceptions rather than the norm.

What scam artists are good at is pitching to your emotions. It is common to hear phrases such as “this investment will help you provide for your parents” or “give your children what they need.” Alternatively, you might be invited for a nice wine and dine, to give you an example of the good life that you can get if only you trusted your money with these scam artists.

In Singapore, it is typical to see a financial scam operating based on the following model.

1. They guarantee your principal

No one likes to lose money. At the same time, finance savvy people would understand the risk-return theory – you can’t expect higher returns without taking more risk.

Unfortunately, there are people in Singapore who do not understand this concept. And this is where scam companies come in to guarantee the principal amount that was “invested” in the company.

2. They give you high returns

Scam companies know that people are attracted to the idea of getting rich quickly. Hence, they promise high returns to their customers, even while guaranteeing their principal.

3. Paying You To Give You An Option

In finance, we have an instrument call a “put option”. A put option allows the holder of the option to sell his asset at a given price to the counterparty. The holder purchases this option.

In the typical scams that we see in Singapore, this “put option” is almost always given out for free. In addition to that, the scam company also promise a certain return as well. This is entirely illogical, and yet, there are many people who fall for such scams.

The most effective way for us to avoid these scams would be for us to do ample homework before making any hasty decisions. Singaporeans also need to take a more proactive approach whenever we come across what we think could be a scam. Rather than to wait for the government to do something, we can do our part to help inform others on businesses that offer suspicious products so that more people will be aware and can avoid these companies.

The Singapore Scam Discussion is a community created for such an objective. It’s an open Facebook group that has one simple objective, allow people to share on relevant information relating to possible scams so that others would avoid falling for them. If you have something you wish to share, we will encourage you to join the group.

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