If you have been an internet user for as long as I have been I am sure you will have came across plenty of scams and blatant get rich quick frauds. My default action is to trust nothing I read on the internet unless it has the following five components:

1. The claim fact or statement is verifiable.
2. Multiple non related entities verify the claim or fact.
3. There is a published or peer reviewed work relating to the claim or fact.
4. The source is trust worthy.
5. The source is not trying to sell me something.

You can be anyone you want online

On the internet you can claim to be anything you want. You can use a false name change sexes, get an instant degree or Ph.D, be a master trader, find a cure for cancer, lose 1000 pounds from eating grape fruit and the list goes on. The one crucial thing all rip off scammer sites have in common is a great story. It doesn’t matter if this story is completely false as long as it sells. The stories told usually involve a great achievement and frame the intelligence of the promoter who created the product course or E-book. They will usually use images to evoke an emotional response. These images will include the promoter next to an expensive car, In a large house and next to or in a boat.

Freedom???

Wealth???

Status???

Are you being sold a Lemon? Site layout can be an early warning sign

There are seven components that most internet marketers use to sell there wares online, these are highlighted below. My guard is instantly raised when I come across a page with these features. I should note not all pages with these characteristics are scams.

Squeeze Page

This is the first part of the sales process and is a very important part. You will arrive at a page offering you a free report, ebook or service for merely providing your email address. This allows the promoter to contact you in future about new offers.

Loooooooong Sales Page

The page you visit next will be the sales page. This page will generally be extremely long and scrolling to the bottom will take some time. Rather then having multiple pages everything is shown on the one page.

Sales copy

Everything written on this page is designed to convince you to buy the product. First the sales copy will clearly define the problem and will then take you on a textual journey showing you the ONLY way to solve the problem will be to purchase the product.

Important take action key words will be highlighted through colour and font size. Don’t suffer any longer XYZ product is here to help. But wait there is more……

Buy NOW

A Story that will sell

Sometimes the story will come first but usually you will find the story in the middle of the sales copy or to the right hand side. The stories usually have a similar theme and are designed to frame the promoters intelligence or take us on a journey from rags to riches. Sometimes they involve a Dr., Harvard graduate or genius discovering the meaning of life and sharing it with the world (for a small fee off course ). Other times a stay at home mum will discover she can accurately predict the stock prices of companies by the time it takes the washing to dry on the line.

Positive testimonials

Have you ever seen a negative testimonial on a sales page? No, neither have I. This must mean that this is either the best product in the world or the testimonials are not an accurate representation of the customers experience. These days most testimonials are fake anyway, there are companies which only exist to provide marketers with fake testimonials.

Alleged limited time offer (perceived scarcity)

This is one of my favourite techniques marketers use, the act now or miss out. There are different variations depending on the product or service being sold. The include:

1. Buy Today and receive an extra gift.
2. Limited copies left.
3. X places left.
4. The signup process will close at X.

This creates the illusion of scarcity and as we don’t want to miss out we will purchase it right now.

Badges of Credibility

Most sites use the badge technique and offer a money back guarantee or a satisfaction guarantee. You notice an image similar to the one below in the copy, however the stipulations of the guarantee will be in fine print and you may find it hard to get your money back.

E-Book Scamming

Maybe I am just old fashioned but before I buy a book I like to open it up see what it contains,skim through and see if it something that I would like to purchase. With eBooks you don’t know what you are going to get until you purchase it. Some eBooks are of high quality while others aren’t worth the space they take up on your hard drive. Anyone can write an eBook and generally the quality of information provided is low. The business model eBook writers use is shown below:

1. Identify a niche with strong demand that is not saturated with eBooks.
2. Write out a general outline for the book.
3. Buy a domain name and Hosting. Average cost US$150
4. Hire a writer from India, Philippines or another country that will write the book. Average cost US$200.
5. Use a pre-packaged squeeze/sales page.
6. Use an auto-responder to soft sell email addresses captured.
7. Write sales page.
8. Open an affiliate program so other people can sell your book.
9. Sell 150 eBooks @US$29.95 each and make a quick US$4142.5 profit.

Trade System Scamming

This is another scam that is prevalent and right now usually involves the Forex market and MetaTrader. This scam is particularly easy to spot.  These trading systems are never tested on real money accounts as the creator now they are heavily curve fitted and are designed to show good performance for a specific historical period. You will almost always see in fine print down the bottom this CFTC risk disclosure:

“HYPOTHETICAL PERFORMANCE:
RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL, OR IS LIKELY TO, ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN TRADERS OPINIONS AND FOLLOWING SPECIFIC TRADES THAT AN INDIVIDUAL MAKES. THERE ARE ALSO DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS ‘PAPER TRADING’ AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM, IN SPITE OF TRADING LOSSES, ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS, IN GENERAL, OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS.”

Ask yourself this: If you create a trading system that makes you large profits would you sell it? or would you keep it to yourself?.

Education provision Scamming

Trading is hard and for the most part there is no course you can sit that will guarantee you will be a successful trader. I have heard from countless people who have paid upwards of $10,000 for training only to be left with remedial knowledge they could have gained from a good book.  My advice to anyone considering trading is to start be reading a few classic books:

1. A Random Walk Down Wall Street.
2. The Black Swan.
3. Investment Analysis & Portfolio Management.
4. Money, Banking and Financial Markets.
5. Using Econometrics a Practical Guide.

These five books give you the fundamental knowledge required to understand the market.

Links

• Australian Securities and Investment Commission Scam Watch.
• National Futures Association
• U.S Securities Exchange Commission.
• Better Business Bureau.
• Scam Watch.
• Snopes.