Different types of online scams and how to avoid

Along with individuals, entrepreneurs, students, professionals, internet has also been extremely helpful to scammers. Just like the internet provided a great opportunity to small businesses to reach out and find buyers from all over the world, scammers can also prey at victims* from all over the world, just like the students can make use of various techniques to acquire more and more knowledge, scammers can also employ techniques as hacking, forgery* and the likes. Where the online marketers are always thinking of new ways of doing business, making sales, converting leads into sales, scammers are also thinking hard to defraud people in new ways.

Work at Home:
Of course, lots of people work from homes and it has transformed into an industry. But that only makes it worse, because people can see other people working and earning from their homes, they fall easily for these work at home offers and pay some sort of registration fee. Whole websites are dedicated to lure people and it’s not easy to differentiate between the real and the fake ones. So what’s the best way to see if they are fake or real? There’s no fool proof way to do that, therefore the best bet is to don’t pay any kind of fee to any of these work at home companies. There are very few companies who actually provide this kind of jobs but they wouldn’t be asking for any registration and they won’t be promising big dollars for little amount of work either.

Billionaire & Six figure Income:
Often, you’d have been to some website of an “allegedly” billionaire, who narrates his success story and then tries to sell his secret to you. These “getting rich quickly” stories are enticing and they make you miss one obvious point. The person who’s selling his secret to you is already a billionaire and he’s comfortably earning billions right now so what’s the point of selling their secret to others for a minimal amount? Billionaires aren’t supposed to go for these small profits, second selling their secret means they are inviting lots of competition that will only slash their own profits. Therefore these schemes have fraud written all over them.

Money Transfer:
This is another very, very common type of online fraud. Doesn’t matter which email service are you using, this email must have reached your inbox at some point of time. That narrates some tragic story; praise your nobleness, and concludes with a request to help the sender transfer, a huge amount of money. You don’t even need to put a fraud-check to these emails because these are confirmed imposters.

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A brief introduction of Money market instruments

The market that helps short term borrowers find the lenders or vice versa, is known as money market (similar to the other financial markets however “short term” is the key word that distinguishes money market from other financial markets). Borrowers go to the money markets when they are in need of short term loan and the lenders provide them with the required financing. However, both borrowers and lenders do not trade in cash. Securities which are traded in money markets are called money market instruments. Following are some of the most commonly used money market instruments.

Commercial Papers:

Normally banks and financial institutions issue commercial paper, which is a promissory note that entitles note holder to get the face amount on a fixed date. Usually commercial papers are issued for short terms and their maturity period ranges from 1 to 270 days. The only guarantee you have when purchasing commercial paper (to get the promised amount or at least the amount you’ve invested) is issued by the bank or corporation itself, which is why they are known as unsecured promissory notes. Because of the high risk involved, issuing companies offer higher interest rates to investors.

Treasury Bills:
Very similar to commercial papers, however treasury bills come with the guarantee of the treasury department of United States, making them an investment with very little risk. The maturity periods often extends to one year (starting from 4 weeks) with no payments preceding the maturity date. These bills are divided into two categories known as marketable and non-marketable securities. You can buy directly from treasurydirect.gov or from brokers.
Certificate of Deposit:
The investors deposit some amount into banks or financial institution and get a certificate known as Certificate of Deposit. Interest rate is fixed (the bigger the amount, the higher the interest rate will be) and a fixed maturity period as well. You cannot take out your money before the fixed date, in case you really need to withdraw; you’ll have to pay a penalty.

Banker’s Acceptance:
Banker’s Acceptance is basically a draft accepted and signed by some well known bank. The acceptance by that particular bank makes it an instrument used in money market as it carries very little risk. Once a time draft is approved (accepted) by some bank, the drawee can sell it in secondary market in case he/she is in need of immediate cash (of course at a price lesser than its face value). It is very similar to US Treasury bill; however the guarantee comes from some reputed bank instead of US government.

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