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  • Writer's pictureRevanno

Don'ts & Do's Series Part 2: Financial Scams

Our last financial blog post started the Don’ts & Do’s series. This three-part blog series focuses on things to avoid doing during the economic downturn, and also highlights ideas that may prove beneficial.

Don’t #2: Do not fall for financial scams


Financial literacy not only tackles the ideas of managing expenditures and investing, but it also involves having a basic understanding of financial scams. During times of economic uncertainty, the rate of scam activities increases significantly. We all may be familiar with the “Samsung Lottery” or “FOREX trading team” messages that were frequently sent to our social media accounts. However, this type of fraud occurs in various forms and it is important to identify what is a legitimate business opportunity versus what is not. Financial fraud can be defined as “an intentional act to separate someone from their money in a deceitful manner” (see “Ellis 2011”).


As the economic woes from the Covid-19 pandemic are still being experienced and most likely will be for some time, it is vital that we not fall victim to financial fraud. So what are some ways to identify if an opportunity is legitimate?


Well here are a few things to consider:


1. Ask yourself does this opportunity sound too good to be true? – This may sound a bit basic, but it is something that must be deeply examined. I am a believer that living creatures have an innate sense of danger. Usually when something does not feel right, our gut gives off an unsettling feeling. This is usually the case when someone promises you an obscene amount of money for little to no work.


2. Obscure/Unclear Explanations – If someone is explaining an “investment opportunity” or “business idea” to you in a way that sounds very complicated to the point where it feels as though they are trying to overwhelm you, chances are it is not legitimate. Most persons that pitch a business idea want to ensure that their potential investor understands the concept. Therefore, the aim is to make it as simple as possible to understand. However, if someone is providing overly vague yet complex explanations and is promising surreal returns on your investment, it may not be legitimate.


3. Heavy video promotional material. – If someone keeps pushing that you watch a video to understand rather than explain the matter to you, it probably is not an above the board business venture.


4. Money takes long to be received/is not received. – A major signal in financial scams such as Ponzi schemes, is the wait it takes to receive the money. That is usually because there is a float period during which money has to be taken from other “investors” before it can be distributed to previous “investors”. For example, robbing Peter to pay Paul.


What to do when you discover you are involved in a financial scam?


The best thing is to contact the authorities right away. With the evolution of technology and a shrinking globe, financial fraud can be pervasive to all economies, big and small. The Bahamas has been no stranger to these occurrences as scammers from around the world are able to infiltrate a population that may not be as well versed in combating these frauds.


Closing Remarks


Overall the best thing to do in preventing oneself from being scammed is to have a level of skepticism. Although it may seem gloomy to think that everyone may be out there to separate you from your money, it is an important fear to have in the modern world. A vital practice to have is to question. Why is the person telling you about this revolutionary way to make money? How does this work and why isn’t everyone doing it? Or What are the ways in which I may lose money? Few things in life are guaranteed – change and death. And anyone guaranteeing you that you won’t lose money, that it is legitimate and that they are the only person smart enough to think of this business idea, will probably try to sell you the Paradise Island bridge.


If you are looking to invest money legitimately


Speak to an investment advisor. Meeting with a professional can help you in determining your financial needs. You can feel free in filling out our contact form and we can refer you to a few.


There are also legitimate licensed small businesses that may be in need of funding. You can network via LinkedIn, Twitter or Clubhouse to determine which small business may be of interest to you. Whether it is in the form of being a seed investor, silent partner or an active partner, there are viable investment opportunities out there. And it just so happens, that a few days before making this post, ArawakX announced its upcoming crowdfunding platform. This will enable persons both locally and internationally to invest in businesses both small and medium in size (see “EyeWitnessNews 2021”).


Note: This blog reflects my opinions and is for informational and/or entertainment purposes only. This blog does not reflect the opinions of any organisations with whom I am affiliated. This blog is not intended to serve as a substitute to professional financial advice and guidance. As such, if the reader places any reliance on this blog, he/she alone accepts all risks and damages. Although I am a licensed accountant, please schedule a formal meeting with a financial professional before taking any actions. I reserve the right to change the focus or content of this blog at any time.

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