By in Wealth

 Enjoy this creative article written by Eliza Cross of Happy Simple Living.com.  The post is part of a collaborative endeavor by members of the Yakezie Network, the world’s largest network of personal finance and lifestyle blogs. This month’s, topic for our blog exchange is “What is your biggest financial pet peeve?

When you’re done reading this article, head over to Happy Simple Living and check out my article, “Financial Advisors Who Get Paid to Sell Products Bother Me.

So what bugs me? I’ll tell you what bugs me – companies and people that try to take advantage of others, often by exploiting them when they’re financially ‘down.’ Here are some examples:

  • Pyramid scams

We’ve all seen the ads that promise big money: “Sleep until noon!” “Work in your pajamas!” Unfortunately, the only people that usually make any money in these schemes are the organizers at the very top. Ripoff Report also lists 846 Multilevel marketing (MLM) company complaints, many with reports high monthly thresholds and low commission rates, misleading promises and loss of initial investment.

  • Lottery tickets

Sadly, high-frequency players tend to be poor and uneducated. Here’s a shocking statistic:  On average, households that make less than $12,400 a year spend 5 percent of their income on lotteries.

  • Gambling

Whether it’s a casino, racetrack, or the local bookie, the lure of gambling preys heavily on those with meager financial resources by inducing false hope and often making a financial problem even worse when the gamble doesn’t pay off.

  • Phishing schemes

Thieves create official looking e-mails requesting personal financial information or passwords, usually with a warning that your account will be disabled or other time-sensitive deadline. For those who unwittingly enter their sensitive information, identity theft soon follows.

Even smart, successful people occasionally get taken in by scams; Ponzi schemer Bernie Madoff’s victims included several billionaires and even Hollywood director/producer Steven Spielberg’s foundation. How can you protect yourself?

 Here are some tips to help you bypass these scams: 

1. Remember the old adage, “if it sounds too good to be true, it probably is.”

2. Check out a company on the Better Business Bureau to find out if it’s reputable. Before signing up to sell products for any company that uses the MLM model, thoroughly research the company and its sales tactics.

3. If an e-mail looks suspicious, call or forward the e-mail to the customer service department of your institution to make sure it’s legitimate before divulging any personal information. Most companies rarely e-mail asking for password information.

4. Snopes.com is a great source for researching information that circulates around the internet.

5. Keep your antivirus, spyware, firewall and operating systems up to date.

6. Use secure passwords and change them often.

7. Rather than gambling away a nickel of your hard-earned money, work with a trusted advisor to develop a long-term financial plan.

Have you been the victim of identity theft or another sleazy scheme? What are your financial pet peeves? We’d love to hear your comments.