“A scam is a scam. A fraud is a fraud.” – Emily Thornberry

Protect Yourself From Corona Scams (and All Scams, for That Matter) 

Those damn scammers.

On Wednesday, I listed some of the cyber scams out there aimed at people working from home. And the scammers don’t stop there. I’ve been getting government notices and reading newspaper articles about the measures we should be taking to protect ourselves from the many coronavirus-related scams that are burgeoning today.

Some give sensible advice – like this, from Medicare:

* Only share your Medicare Number with your primary and specialty care doctors, participating Medicare pharmacist, hospital, health insurer, or other trusted healthcare provider.

* Check your Medicare claims summary forms for errors.

Problem is, this applies only to Medicare scams. To defend yourself against every possible scam coming your way during the Corona Crisis, you’d need a list of do’s and don’ts a mile long. And even if you had such a list, you wouldn’t use it because the advice would be too specific – too difficult to remember.

Getting scammed sucks. I’ve probably been scammed dozens of times. I can’t say for sure, because I don’t like to carry grudges.

But there is one that I can’t forget…

His name was SS. He was recommended to me by a trusted colleague as a credit repair expert. We were creating a course on that subject, so we hired him to help us develop it. He worked for us remotely for a few months. Although I had only a few conversations with him, he seemed knowledgeable, agreeable, and friendly.

He told me that he had attended a three-day seminar I gave on entrepreneurship. He said he left early for some reason. Now I know why: He wasn’t interested in what I was teaching.

Some months into our relationship, he came to town to work with our editors. He stopped to visit me at my house one weekend morning. Within five minutes, I knew he was going to hit me up for something. I went inside to get us some coffee and told K, “This guy is going to ask me for money.”

“Don’t even think of giving it to him,” she warned.

“Don’t worry,” I said. “I know what he’s up to.”

A half-hour later, I agreed to lend him a hundred grand.

A week later, I wrote him a check. It was done as a formal loan through our legal office.

Almost immediately after we closed the deal, I felt queasy about it. I researched him on the internet. There were, as I would have expected, criticisms of his books and programs – but nothing about him and his business practices that concerned me.

I told myself not to worry, that I had a legally binding contract and collateral. But as the days passed, I couldn’t shake that uneasy feeling. Finally, I asked one of our research geniuses to do a deep search. Sure enough, he was a scammer. A charming, clever scammer.

He made his living by borrowing money from people he met through his business and welching on the loans. He would string out his creditors long enough to put a couple million in his pocket, and then he would declare bankruptcy. He had gone bankrupt something like seven times.

I remember this particular scam because (a) it was a lot of money, (b) I knew better, and worst of all (c) I had to admit my stupidity to K.

It was an immensely embarrassing mistake. And that’s why I’m still mad at myself. Ten years before it happened, when I started writing about wealth building, I had already thought and written about scams. I had ideas. I even had rules. Had I followed my own rules, I would not have made that “loan.”

Here are the rules – a simple five-part protocol for defending yourself against most scams – coronavirus scams, business scams, investment scams, telemarketing scams, whatever:

1. Never invest in (or make a loan to) any business you don’t thoroughly understand. And by understand, I mean being able to look at a P&L and balance sheets to detect any irregularities.
2. Never give money to someone or some business that you don’t have an existing, longstanding relationship with.
3. Never invest in (or make a loan to) any opportunity that is “urgent” or has any sort of deadline.
4. If you have any doubt whatsoever about the deal, say no.
5. If you decide to violate any of these four rules, don’t write a check for more than you would care to lose. Because there is a chance – maybe even a good chance – that you will lose it.