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Financial Literacy - April 29, 2022

5 Scams People Still Fall For

Human nature is the biggest weakness in any system. Interestingly, there are some outlandish scams people still fall for despite the avalanche of awareness and sensitisation online and offline.

On the other hand, it might be hasty to blame the victims because the scammers, too, are devising new techniques to mask their fraudulent schemes, especially with advanced technologies. 

According to Nigeria’s Federal Trade Commission (FTC), more than 2.2 million fraud reports were filed in 2020, resulting in a loss of more than $3.3 billion across the country.

Many people believe that the victims have certain characteristics, such as being naive, vulnerable, or stupid.

In many cases, the scams people fall for are due to the scammer’s psychological methods, not because of any inherent defect.

Almost everyone has received a scam email at some point. The majority of people just delete these emails, but a significant number do not.

Con artists use various techniques to defraud people, many of which are plausible.

They might create a phoney dating profile and then demand money for emergencies. Some pretend to be government agencies and threaten the victim with arrest unless they pay a charge.

Sometimes, scammers target retirees because of their acquired riches, but they target people of all ages.

Here are 5 of the scams people still fall for.

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1. Ponzi schemes 

Charles Ponzi is the founder of the Ponzi scheme. He is credited with inventing the world’s most popular money scheme.

The structure of a Ponzi scheme is rather straightforward. In 45 days, he guaranteed investors a 50% profit, and in 90 days, a 100% profit. In the beginning, he was a man of his word, returning the money promised.

It wasn’t long before people were practically begging him to take their money. However, no gains were made. He was just transferring money from investor B to investor A.

When you operate this scheme long enough, you’ll reach a critical mass, at which you disappear with everyone’s money.

There have been numerous examples of this type of strategy in the past, but it continues to be a popular one.

The goal of every Ponzi scheme is to steal money from unsuspecting and maybe greedy people, most of whom are new investors or participants. 

The rise of Ponzi schemes in Nigeria coincided with the country’s official declaration of recession in early 2016.

Many participants or investors in the MMM scheme lost a significant amount of money. 

However, people did not learn their lesson after the MMM mess, and more ponzi schemes arose, such as Twinkas, Ultimate Cycler, and different Whatsapp contribution groups, which also went down in a fiasco. 

2. Con-man

The name “con man” is derived from “confidence man.” The word was first used in 1849 when the New York Herald published an article headlined “Arrest of the Confidence Man” concerning William Thompson’s arrest.

Thompson would approach passersby on the street, strike up a conversation, and then ask if they had “enough faith in him to entrust their watch to him until tomorrow.”

The victims would then hand over their valuable watches to Thompson, believing him to be an acquaintance they had forgotten about.

The activity has grown in popularity over time, and it is now divided into a long and short con. In 2019, Adewale Jayeoba, the marketing director of Wales Kingdom Capital Limited, perpetrated a long con.

He promised a 10% profit on every amount of money investors brought in. He was also punctual in delivering the interest alongside the previously deposited fee. 

He promised his investors that he was a suable organisation and a man of his word, having a legitimate company in Ogun state.

On his social media accounts, he demonstrated and showed a lot of confidence by dressing up as a vibrant entrepreneur and posting inspirational and entrepreneurial statements daily.

In December 2020, Adewale announced a glitch in the investment operation that would soon be fixed. 

Eventually, investors couldn’t receive both the deposited money and the interest, hoping that Wale would keep to his word. But he did not. 

In 2021, Jayeoba made a run with N916,607,715.48, putting an end to the charade.

3. Internet scam

This is a common scam in Nigeria from fake employment scams, fake bank scams, hijacking someone’s social media to promote Ponzi schemes, fake credit and debit warnings, cyber crimes, romance and dating scams.

Ramon Abbas, also known as Hushpuppi, Hush, or Ray Hushpuppi, is a popularly known cybercriminal who is currently facing criminal charges in the United States for conspiring to launder money earned through business email breach crimes.

Until his arrest by the Dubai Police in June 2020 and extradition to the United States, his other scams included schemes that defrauded a US law firm of about $40 million and illegally transferred $14.7 million from a foreign financial institution. 

He also targeted stealing $124 million from an English football club.

4. Selling Infrastructures 

Emmanuel Nwude Odinigwe, popularly known as Owelle of Abunuga, is a Nigerian advance-fee fraudster and former Director of Union Bank of Nigeria.

In 1995, Nwude impersonated Paul Ogwuma, the then-Governor of the Central Bank of Nigeria, and persuaded Nelson Sakaguchi, a director of Brazil’s Banco Noroeste at the time, to “invest” $242 million in a new airport in Abuja in exchange for a $10 million fee.

Between 1995 and 1998, Sakaguchi paid $191 million in cash and the remaining as outstanding interest.

The Spanish Banco Santander attempted to acquire the Banco Noroeste Brazil in August 1997. 

The fraud was discovered following a joint board meeting in December 1997, when a Santander official enquired about why a substantial sum of money, equivalent to two-fifths of Noroeste’s total value and half of their capital, was lying unmonitored in the Cayman Islands.

5. Crypto scams

Crystal Blockchain, a corporation that specialises in investigative analytics for blockchain and cryptocurrencies, issued the “Crypto Hacks & Scams Report 2021.” 

The report showed an increase of more than 80% in crypto frauds and thefts.

In the same year, the Israel-based blockchain analysis firm, Whitestream, published a report detailing four cryptocurrency frauds that originated in Lagos, Nigeria, claiming that “it appears that Lagos is a central focus point in Africa for investment scams of this kind.”

The con artists preyed on inexperienced cryptocurrency users. Users are asked to transmit bitcoin directly to the crooks, who promise profits but then disappear with the money.

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