If living frugally has downsides, one is that it places you in a position to be scammed. Anytime you are cost-conscience and budget-oriented, you open yourself up as a target to people looking to pawn something at a rate that is too good to be true. While you’re unlikely to be scammed over something that doesn’t cost very much to begin with (like, say, tomatoes), the higher the expense the more someone has to gain by scamming an unsuspecting consumer.
Some examples of high-expense items where scamming is prevalent include: car shopping, vacations, housing, and pricey retail merchandise. In living frugally, one has to find a balance between seeking out cost-effective items and keeping a strong enough sense of reality to avoid being the victim of a scam.
Follow these tips to help decrease your chances of being the victim of a high-dollar scam:
Before doing things like buying a car on AutoTrader, subletting an apartment overseas, or making a big purchase on eBay, research to find out how to detect scams in that particular arena. For example, AutoTrader has a fraud awareness page. Anyone planning to shop for a car on that site should read that page so they know how to identify a scam when they see one.
Another frequently used website that is teeming with scammers is craigslist. Like AutoTrader, craigslist has a page to tell you all about how to spot a scam on their site. Any large commerce site worth its salt is going to have a similar such page, so find it, read it, and be aware of how to spot a scam.
The Golden Rule
The Golden Rule of avoiding scams is: if it sounds too good to be true, it probably is. Don’t become taken in by an amazing offer or get rich quick scheme. Getting rich quick is very hard. It’s almost impossible when you’re being told that you’ll “get rich quick” beforehand. Remember, if whatever the person offering you in a “get rich quick” scheme is so great, why aren’t they hoarding the idea to themselves?
One example of a get rich quick scheme is a seemingly straight businesses offering you the opportunity to learn how to turn almost nothing into hundreds of thousands in the stock market. Oh, you just have to pre-pay $5,000 for the course to learn how to do it.
Use Trusted Websites
If you’re negotiating any major purchase online, use a trusted website only. You can check a site’s ranking on Alexa.com. A site with a ranking into the millions is very small. If they are promising you the world, chances are it’s a scam.
Use a Credit Card
The nice thing about making purchases with a credit card is that if you are scammed, the bank will usually allow you to cancel or “chargeback” the transaction. For this reason, never submit payment to someone via wire transfer or Western Union unless you completely trust them. Anyone asking for money up front via a bank transfer is almost certainly scamming you no matter how trustworthy they seem or what they’re offering.
Watch for Poor Grammar
If you are in an English speaking country and notice that the individual soliciting you online uses poor grammar, be suspicious. There is a reasonable chance that they are scammers who are based out of the country and are not native to the English language.
Never Share Your Password
There is virtually no reason why any website would ever ask you for your password in any way except to log onto their site. Many people may not know this, but most websites do not even know your password. It is encrypted from the moment you register so that even the website’s trustworthy owners have no way of ascertaining your password. If someone posing as a customer service representative for a particular website asks you for your password, a red flag should go up immediately. No reputable website would ever do such a thing.