[Letter to the Editor] How to avoid being scammed? It is about managing expectations

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Letter to the Editor

By Adrian Lim

Almost weekly, there seems to be a scam case being reported, with the amount being in the hundreds of thousands and sometimes even millions of ringgits. The victims range from people who are young, such as students, to the old and people who are educated, like company directors.

This makes me wonder why consumers easily fall prey to scammers and not learn their lesson. Money, which is hard-earned and a valuable medium of exchange, should not be transferred to someone whom we do not get to know well easily. Why do certain people trust someone whom they do not know? Perhaps, when a person receives an offer, especially a monetary offer, which is too good to be true, their mind becomes irrational.

Scammers like to set up traps for people to fall into, especially using electronic means such as advertisements on online sites and through WhatsApp messages. They entice people with lucrative offers, and their motive is to target the psychological emotion of greed.

In most cases, the monetary offers that they provide come with promises of gains and handsome returns. This gets a person excited, and greed overtakes rationality in evaluating the offer. They only paint the picture of everything rosy and wonderful, whilst one needs to remember that there are always two sides to a coin.

As a person with financial knowledge and background, I have been taught about reward and risk when it comes to investment and money management. In the case of scammers, they promoted the reward part but neglected to outline the risk part. Why did they not promote the risk part? Simply because human beings are risk-averse, and they know their plan will fail if they say their offer contains risk.

Consumers should think rationally when they see or read an offer. If there is something which is too good to be true, then it is more likely that it is untrue. One can use the C.I.A. method, which is to check, investigate, and ask when one comes across a monetary offer from someone they do not know.

First, check the offer with a legitimate or trusted source to see whether there is such an offer exists. If it is a financial product or service, investigate with the authority, a regulated body such as Bank Negara Malaysia (BNM) or Securities Commission (SC) or a licensed adviser whether it is genuine or fake.

As an investor who invests in financial products and services myself, I prefer to put my money into a company or organisation which is regulated or governed by law. This ensures that I have an avenue to seek compensation or unintended losses in the event that the organisation goes bankrupt or closes down.

Moving on, if a consumer still has doubts, they can ask their friends or family members who are close to them. There is nothing wrong in asking whether the information they received is true or false. As Chinese philosopher Confucius once said, “The man who asks a question is a fool for a minute; the man who does not ask is a fool for life.”

Hence, people should learn from the bitter experiences of the many scammed cases that serve as a lesson to become wise and smart consumers. We should be more alert and careful so that we can reign over scammers.

While the methods mentioned above are good, another important step that consumers can take is to spend some time and money to equip themselves with financial knowledge and education. With financial knowledge, one will be able to apply critical thinking and exercise caution when someone is making an offer, especially when it involves a large sum of money. They will also become more aware and make good judgments when it comes to making decisions about money, whether it is for investment or to avoid being scammed.

In the financial services industry, financial consultants are required to explain to their clients the two sides of a coin, meaning the rewards and risks involved for clients to make informed decisions. This is part of the code of ethics or standard operation procedure (SOP) required by the industry. As such, make sure anyone who makes a monetary offer gives you the SOP before making a vital decision involving money so as not to regret it in the future. Besides, one can also adopt a risk management strategy, which is called diversification, to spread out the risk or risk losing all the money to one party.

For online scams, one can call the National Scam Response Centre (NSRC) at 997 to instruct the financial institution to block the transfer of funds. NSRC is a joint effort between the National Anti-Financial Crime Centre (NFCC), the Royal Malaysian Police Force, BNM, the Malaysian Communications and Multimedia Commission (MCMC), financial institutions and telecommunication companies to fight online scams.

Consumers can also contact NFCC at 03-88613830, police at 03-26101222 and BNM at 1-300-88-5465 for further details on NSRC.

Adrian Lim is a financial consultant for a boutique investment company. He is a graduate of Applied Finance and worked as a business writer. He has won the Kenyalang Business Reporting Awards. He has a keen interest in personal finance and money management and developed an interest in research in investment in stocks. He believes that one should manage his or her finances wisely and prudently to achieve one’s financial goals in the later years of life. He can be reached via e-mail at adrianlim17828@gmail.com for any comments or feedback.

This is the personal opinion of the author and does not necessarily represent the views of DayakDaily. Letters to the Editor may be lightly edited for clarity.