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How to Recognize Money Scams and Prevent Falling a Victim

money scams
Written by Igor K

Are you sure they can’t trick you? You’re confident enough to recognize money scams? Just like you, many are confident in their ability to recognize the foul play and yet they fall victim to the cunning scammers.

It’s their own brain that fucks them over.

The thing is: when you put your mind to something, you’ll figure it out. Same goes for money scams.

While your focus is on the everyday life, the money scammer is thinking only about two things:

1) The brand new type of hoax

2) The update of the already executed scams.

And as we all know, what you focus on expands.

Take Pyramidal Scheme money scams for an example

It’s nothing new, to begin with. Ever since we started to use virtual values to buy things, there were people who were looking for the ways to build their fortune on less morally acceptable ways. They were guided (and still are) by only one principle: get rich quick with a money scam and disappear in a cloud of dust.

Centuries later, this practice became a widespread phenomenon, with at least one Pyramid per country where each is generating money for the original brain. People are just naïve and willing to buy the message on the sticker. That’s all.

The methodology of the Pyramid Money Scams is simple:

money scams pyramid scheme diagram

First, you gather a team of the like-minded people. They all need to be expert salespeople with extremely low moral standards and affection for money.

Your only job is to prove to them that in less than a year, every one of them will live a high-end life. And when everything collapses (which will eventually and inevitably happen), they’ll be able to “buy” their way into some country with no extradition.

The next step is marketing. You use the classic MLM system where money is coming from the wide and high pyramidal structure of horizontal and vertical tiers.

The most common bait used to persuade regular people (victims) into giving their hard earned money is a box of some useless and extremely overpriced products.

To gain the momentum, and pass that psychological barrier of 13% of “investors,” otherwise known as the “tipping point,” you’ll use illegal sales techniques.

Once the momentum is reached, the system will automate itself on account of greed for money from the lower tiers.

Already after the 3rd level, nobody will know who started the whole thing, when did it start, and how much money is in the money-scamming game.

In less than a year, you’ll be driving a brand new Ferrari just because people are willingly giving away anywhere between $100 and $500, depending on how fast you wanna make money and how good are your “sellers.”

Then, just when it seems that the game is over, those lower levels come into play again. What started as, let’s say $100 entry investment, is now already at $500. There are many new “players” seeking to extract ever more. The system is now fully autonomous. But you’re getting your cut nevertheless.

The game ends when there are no more “investors”

The analogy is a game of musical chairs. When the music stops, someone is left high and dry. In Pyramidal schemes, this is the moment when there are no more interested people to give away their hard earned money.

It can take years for this to happen and it depends on the ability of your operatives to scout for great horizontal tiers or people who are good at selling bullshit.

Nonetheless, sooner or later the game will lose its momentum, negative marketing will spread, and people will stop buying your bullshit. By that time, you’re long gone, with millions piled up on several off-shore accounts that no one can trace. Your money scam worked perfectly.

What’s the advantage of the “box of products” used in low-level money scams?

The fact is: you can get away with the box of products because you’re actually selling stuff and that’s not illegal. What’s illegal is using forbidden sales techniques to push the products for some fixed amount of money.

You’re basically claiming that the product can solve some problem when in reality it does not differ from any commonly accessible and extremely cheap solution.

In the case of the pyramidal scheme, the “products” are just physical items to get people hooked on some fairytale. In reality, you’re interested in nearly 90% margin from anyone who buys the box. It’s easier to sell something people can see and touch. Put an acceptable price tag and that’s it.

That’s why they are using “natural medicine,” hygiene, and cleaning products. People are more sensitive to health-related issues and there will be no problems with wives. If sellers are any good, they’ll target the wives in the first place.

A smart money scammer can do this indefinitely.

Change the products and start the entire process all over again after some cooling period. You’re counting on people’s short-term memory and that raw lust for some quick cash.

The downside is a low-income generation. Because you’ll hardly sell the box of some home cleaning products, alternative (natural) medicine or dust cleaners for more than $200 per box.

Why do you need husbands for presentation in order for the money scam to work?

Because you’re not selling the products per se. You’re selling the scheme. It’s hard to sell the scheme to a woman.

Men, on the other hand, are easy. Driven by their wives’ enthusiasm about the “quality” of the products, each and every one of them will “see” the potential for a quick money generation.

That’s why presenter’s focus is moving away from the products and at one point he’s talking to the male population exclusively. He’ll now teach them how to make money and 10-20% of them will buy it. On their way home, while the wives are thinking about the cool and almost extraterrestrial stain-removal power, the husbands are thinking money.

The product is just a lure to attract women, get them out of the equation through diversion, and engage the naïve ones – the men. Her enthusiasm is just the free bonus that accelerates the entire deal.

The bold ones promise high ROI and fast turnaround which is known as the “Ponzi scheme,” the type of the high-level money scams

With the dawn of the money and connected investments, a new breed of scammers emerged, looking for extremely high numbers.

Bernie Madoff is definitely one of the most known Ponzi scammers. Nobody can tell how much money Madoff managed to squeeze out of his victims since he was focused on high-end clients only.

The method was simple and derived from the Pyramidal scheme.

The only difference was: there was no pyramid. Madoff and his team lead the entire operation. There was only one level and that’s Madoff’s hedge fund.

money scams ponzi schemes


The methodology just couldn’t be simpler:

  1. I persuade you into giving me $1M, promising you high return in short period of time. I’m a good seller with the proven track of records (Madoff was a respected Wall Street wizard) so you’ll bite the hook.
  2. Then I find another money-hungry victim, take his $1M, call you in few weeks and pay you promised $50-100K.
  3. You’re overwhelmed and now I have the revolution. Because, in reality, you just need to find the second guy! You’ll call me later that day and invest additional $1M.
  4. All I have to do now is to keep adding clients to my portfolio and stay highly concentrated on timeframes.

What I’ll do with all that money is up to me. But as long as you’re talking sweet about me and the investment potentials I’m providing for you, I’ll have no problem finding new victims for there is more money than water on this planet and Bernie Madoff knew that all too well.

What ultimately screwed Madoff and his team was 2008-09 global economic crises.

People panicked and decided to pull out their money from Madoff’s hedge fund. He did everything he could but eventually, the well ran dry. There were no new “investors” to feed the beast. And the beast became extremely hungry.

OK, this is the game of big numbers. How Ponzi money scams look in your own neighborhood?

Same system, only much, much lower amounts. In fact, when observed on a local (low) level, Ponzi looks more like a Pyramid. It’s a hybrid where you’re using MLM but there are no boxes of products. There are also fewer verticals. It looks more like a really flat pyramid.

You’re forced to do this because of the natural limitations of the environment: less money and no well-known name behind your scheme. You need to take more risk and expand the network of “partners.”

This is how this type of money scams works:

The friend of yours calls you one evening, telling you that he has some exciting news. He’s smart not to tell you that it has everything to do with money because by now, people are wary about these things when they hear them over the phone.

But your friend knows one thing about the basic human behavior: people are having a hard time turning down: A) their friend and B) money-making opportunity – once you’re sitting 5 feet away and looking directly into their eyes.

The very next day, your wife is cooking coffee and your friend starts with his exposé.

First, he fires the emotional trigger with his own overwhelming experience. You can see how the guy is pretty excited. After a while, he cut to the chase with, “I’m investing $2,500 per month and expecting anywhere between 10 and 25% ROI on monthly bases! I’ve been doing this for the last 4 months and this month I’ll put close to $10K into it.” The slam dunk comes in the form of, “Each month I receive check in my mail.”

You’re stunned. Especially after he shows you the checks.

You have some mixed feelings going on inside of you. In one hand, you are wary and suspicious. Suspicious all right, but stunned and overwhelmed nevertheless. The adrenaline is slowly dripping in your system.

Your mirror neurons are causing the firing of dopamine and serotonin neuroreceptors. It feels like you already made money.

Simply put, your brain is pulling the prank on you because the guy is your friend and we tend to trust our friends.

It’s how our belief system is made and how we function on a chemical level. In other words, same as you can get your boner by watching porns, the same way you’ll feel the taste of money when someone shows it to you.

Mirror neurons. That’s the biological mechanism your friend is exploiting.

If it was some stranger you never met before, you’d escort him out. That’s why these schemes depend on 1st-tier relationships.

And your friend has one more advantage.

Unlike Madoff, who was dealing with the people with at least some knowledge about investing, your friend is dealing with the folks who are clueless about the matter.

We all like to think that we know how Wall Street boys are doing it but in reality, we know jack about it. And that’s his edge. He can use the numbers however the hell he wants and you’ll trust him because you don’t have any references to rely on. You’ve never made an effort to learn what moves the markets, how much is a realistic return on some investment, how much time does it take to yield it and similar.

And it seems that he’s not selling anything which was your first thought.

OK, if there are no products, what is it? Commodities?

“No,” he claims. “Money only. Money makes money.”

It’s a true statement. Money indeed makes money. But in case of your friend’s business opportunity, the only way that money you’ll give him will make any return is that someone else bites the hook.

The funny thing is: if you’re lucky enough to be among the first guys who bite the hook, you’ll indeed start receiving checks. Because your friend is still building the trust base and he needs you. So he’ll use the money he’ll pick from the others to pay you off.


If that happens, and you start seeing checks with 15% ROI at the beginning of each following month, how long will you wait before you call your friend and offer to invest more money?

Lust for money lies in every each of us. We are having a hard time to suppress our urge to click the fucking link in our email even though we are 100% sure that it’s a scam. And scammers are well aware of that fact. That’s why money scams work like charms – over and over again!

And do you think that your friend’s lust for money won’t force him to take your $10K?


Pretty soon, the entire thing collapses because people have stopped receiving the checks. There’s no fresh blood anymore. Nobody can feed the beast. Your friend is looking at 20 years behind the bars at minimum (if he cuts himself a deal) while the brain behind the entire scam is already suntanning in South America.

This is how you’ll prevent falling a victim of these types of money scams

  • When you’re invited to some presentation and the presenter is more focused on money than on the product itself, you’re looking at the Pyramid scheme without any doubt.
  • If it’s too good to be true, walk away!
  • If you feel overwhelmed and overexcited, sleep it over. Your mirror neurons are fucking with you. Emotions and investments are enemies to one another!
  • Before any kind of a solicited investment, learn the matter and consult the professional. If you’ve never done it before, you know nothing about it. It’s like trying to fly a plane without any experience. You’ll crash. It’s inevitable.
  • The only way to make money in the shortest period of time is to:
    • Have a lot of money to start with
    • Be an expert in market speculations
    • Play on Forex and/or CFD markets with extremely high leverages which is still illegal in some countries and yields revenues only for brokers and up to 3% of all players. The rest are only filling the bucket with the water for these to drink from.


To accumulate the wealth, you have to know:

Every other approach is leading you to debt or perhaps even in prison. So be smart about it.

About the author

Igor K

Former detective, now entrepreneur with the passion for applied investigative journalism, profiling, personal development and business analyses.