April 22, 2025 • 14 mins
Welcome back to The Wealth Effect, where we don’t just talk about making money. We talk about keeping it.
In this episode, we're diving into the dark side of wealth: scams. Because the truth is, building wealth is only half the battle. The other half? Not losing it.
From Ponzi schemes to social media “wealth coaches,” from crypto cons to fake investment platforms, we break down the psychology behind scams and the emotional triggers that make them work, like greed, FOMO, pride, and urgency. You’ll learn how to spot the red flags and protect your money with clarity, caution, and confidence.
We’re unpacking 9 of the most common and costly scams and giving you the mental tools to see through the hype and stay in control. Because real wealth isn’t loud, and it definitely isn’t easy. It’s earned, protected, and built smart.
Let’s fill your pocket—and protect what’s already in it.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Welcome back to another
(00:01):
episode of The Wealth Effect.
Today's episode is about protecting your
wealth because building wealth is only
half the battle.
The other half
is not losing it.
What makes
a scam work?
It's not always
about just a lie.
It's about the way the lie taps
into something deep inside of us.
Our greed, our fear, our
(00:22):
desire for status, our hope.
And the truth is, those
things don't go away.
They live within
us always.
That's why investment
scams keep happening today.
It's not just that we
don't know any better.
It's that sometimes we want
the dream more than the truth.
(00:43):
We're going to go over
nine common scams.
Let's fill
your pocket.
First, the
psychology of a scam.
Scams don't start
with a pitch.
They start
with a feeling.
Maybe it's of
excitement.
Maybe it's of fear.
Maybe it's the rush of
being on the inside track.
(01:04):
Scammers understand this
better than anyone else.
They don't
offer logic.
They offer emotions.
Returns too
good to be true.
A secret investment
that no one knows about.
The opportunity
to be first.
And the pressure
to act now.
These psychological triggers
are what open the door.
And once the door is open,
(01:25):
your money walks out.
Understanding these triggers
isn't just good advice.
It's essential
self-defense.
Because when the heart
races, the mind shuts down.
So when something feels too good, too
fast, or too exclusive, you need to
pause, breathe,
(01:45):
and wait.
Let's get into a
few of these scams.
The first scam is one
of the most iconic ones.
A Ponzi scheme.
Charles Ponzi wasn't the
first to pull this off.
But he became the
name we all remember.
Because in 1920, he promised investors
a 50% return in just 45 days.
(02:07):
His secret was
international reply coupons.
A legitimate
postal arbitrage.
But the truth is, there
was no real business.
Just a money
merry-go-round.
Ponzi wasn't
making profits.
He took money from new investors
to pay off earlier investors.
And as long as people kept investing into
(02:30):
the company, it looked like it worked.
On paper, people
were getting rich.
But underneath,
there was nothing.
Just hype, and eventually,
it all burned down.
Bernie Madoff used the same
playbook nearly a century later.
Madoff ran one of the largest Ponzi
(02:50):
schemes in history,
worth over $65 billion.
He wasn't just some internet
scammer in his basement.
He was a Wall
Street legend.
A former Nasdaq
chairman.
And had built
trust over decades.
And then shattered
it all in an instant.
Ponzi schemes thrive on complexity,
(03:10):
on exclusivity, on scarcity.
They often use technical language,
obscure investment strategies,
and name-dropping
insider networks.
But when you break it all
down, there's one core truth.
If there's no actual product or
service generating value, the scheme is
(03:32):
unsustainable.
Ask yourself, how can I see this
investment actually making money?
Can I verify these claims
through a third party?
Or auditors?
Are there any tangible assets
or operations involved?
But if the answer is vague, or worse,
if they don't exist, then what you're
looking at is
an illusion.
(03:53):
Not an investment.
A real investment
has sustenance.
A scam has
speculation.
Don't get dazzled.
Get clarity.
And if the answers
aren't clear, walk away.
You're not going to
miss out on anything.
Next, a
pyramid scheme.
Yes, they're still
happening today.
They're usually disguised as network
(04:14):
marketing or affiliate business models.
And here's the thing.
Recruiting others into a business
isn't illegal on its own.
But it's when recruitment is the primary
or the only way to make
money in the business.
And that's dangerous.
At a first glance, pyramid
schemes can seem legitimate.
(04:34):
They often start with
a low buying amount.
Maybe $100, $500.
You're told that you'll make that money
back quick by bringing in
just a few more people.
And then those people
bring in a few more people.
The promise
is clear.
Build a team, climb the ranks,
and the money will flow in.
But if you look deeper, are the products
(04:55):
being sold to actual customers outside of
the network?
Or is everyone just buying in
to the promise of future riches?
These scams are
mathematically impossible.
They require
exponential growth.
Every new layer needs more
recruits than the last one.
Eventually, they'll hit a wall, and
(05:16):
the pool of new recruits will dry up,
the money stops, and the
bottoms start to fall off.
The early adopters, those at the
top, might make their money back.
But everyone else,
they're left with nothing.
Or even worse, with debt
because of the investment.
If a business opportunity emphasizes
(05:36):
recruitment over product sales,
if the compensation plan is a maze of
bonuses tied with signing up others,
and if there's more hype
than substance, step back.
That's not a real
business model.
Next is a
pump and dump.
Have you ever seen a tiny, obscure stock
(05:56):
suddenly explode in value after a flood of
social media hype?
On Twitter, Reddit, Discord, everyone's
saying, buy it now,
it's going to the moon.
It's a startup.
It's a pump and
dump scheme.
Here's how it works.
The scammers buy large quantities of a
low-value stock, often a penny stock,
(06:19):
with low liquidity.
Then they create hype, fake news articles,
bots pushing the narrative, influencers
sometimes knowingly start sharing and
spreading the word, the price surges,
and as soon as the buzz reaches a peak,
and average investors start buying in,
the scammers
start to sell.
They cash out, and
the price plummets.
(06:40):
Everyone else, they're left holding the
bag, watching their investment
disappear overnight.
The lesson, don't
chase the hype.
Invest, don't invest
based on your emotions.
Always do your
own research.
If a stock is up 300% in
a day, ask yourself why.
Another one is
(07:00):
advance fee scams.
These typically go, if you just send a
small fee right now, will
release a big payout.
That's the line, or some variations of
it, and is the backbone
of the advance fee scam.
If you're told you've won something,
an inheritance, a grant, a
once-in-a-lifetime opportunity,
(07:22):
all you have to do is pay a small
processing fee.
Maybe it's just
$100, maybe more.
You just need to wire money over,
and then they'll ask for another fee,
and another,
and another.
And by the time you realize it,
it's all a scam, the money's gone,
and so are they.
These scams prey on
(07:43):
desperation and hope.
They flourish in inboxes, DMs,
even fake investment platforms.
But here's the
golden rule.
Legitimate investments don't require
upfront payments to be unlocked.
Another one is crypto
and forex frauds.
Crypto and forex can be real investments,
(08:04):
but with great hype comes great fraud.
Scammers create fake platforms, fake
websites, that look professional,
complete with dashboards
that show fake profits.
You log in, you see the growth, you
get excited, but when you try to
withdraw your money,
(08:26):
suddenly there's a problem.
More verification needed,
more fees, and then silence.
In forex scams,
it's the same story.
Promises of AI trading bots, secret
strategies, guaranteed wins, but behind
the curtains, there's
no trading at all.
(08:46):
Protect yourself by using
only regulated platforms.
Read real reviews, and always test
withdrawals as early as you can.
Because if you can't get your
money out, you are never investing.
Another one is
impersonation scams.
These scammers don't
come with ski masks.
(09:07):
They come dressed
as people you trust.
They pretend to be your bank,
your investment advisor, the IRS.
They spoof phone numbers, forge email
addresses, and mimic
other things perfectly.
They might call you urgently, claiming
suspicious activity on your account,
or email you a link to
(09:28):
verify your identity.
But remember this.
No legitimate institute will ask for your
personal information through a cold email
or unsolicited
call.
Never give sensitive
information to inbound requests.
Instead, contact the institute directly,
(09:51):
using an official phone number.
Enable two-factor
authentication on every account.
Another scam is boiler rooms
and unregistered securities.
Picture this.
You get a call out of nowhere, and a
charismatic voice is
pitching you an exclusive
investment.
It's not available to
the public, they say.
(10:11):
But they think it'd be
a perfect fit for you.
This is boiler
room territory.
High-pressure sales operations
designed to take your money.
They push hard.
They push to
flatter you.
They throw around big numbers
and limited-time offers.
But here's what
they won't tell you.
Most of what they're selling is
unregistered, unaudited, and unverifiable.
(10:34):
Legitimate investments come with
paperwork, with
disclosures, with oversight.
Take your time.
Ask questions.
Demand documents.
If they get defensive or
evasive, just hang up.
And the last one is
social media scams.
You scroll through Instagram and see a
wealth coach leaning on a Lamborghini.
(10:57):
A TikTok trader flaunting
screenshots of six-figure days.
But here's what
they don't show you.
They rented
those cars.
They photoshopped
their bank accounts.
And they have
fake testimonials.
Social media has become the perfect
country ground for modern scammers.
Why?
Because perception is
easy to manipulate.
(11:18):
You can rent a luxury
apartment for a day.
You can lease a
Ferrari for a weekend.
You can buy
followers and likes.
And with a few flashy posts, suddenly they
can look like a millionaire even if their
bank account
is empty.
Many of those so-called wealth coaches
or crypto experts are paid promoters.
(11:39):
They take money from sketchy startups
to hype junk tokens or investments.
They run a pump and dump scheme
using telegram groups, discord chats,
twitter threads.
Once enough followers buy in and drive
the price up, the scammer cashes out and
leaves everyone
behind.
And here's a few common
(11:59):
social media scams.
Fake giveaways.
Which are send one
ETH and get one back.
These are often hacked accounts of
real influencers or celebrities.
Forex and binary
options mentors.
They'll show screenshots of supposed
gains, then offer to trade your money for
you, only to disappear
(12:20):
once the deposit hits.
Impersonation of trusted
brands or people.
Cloned accounts pretending to be major
platforms or well-known figures directing
you to links or
fake investing apps.
Paid discord or telegram groups where
the real product is FOMO and hype,
not financial
(12:40):
insight.
Don't be fooled by followers
or flash or fast talk.
Real wealth is
often quiet.
Smart investors
don't scream.
They analyze.
They research.
They ask the
hard questions.
So next time a crypto bro slides into your
DMs, or a millionaire mentor wants to show
(13:01):
you the secrets to their success, ask
yourself, if they're really making six
figures a day, would they spend their
time pitching to strangers on Instagram?
Here's a few
universal red flags.
Scammers evolve, but their
signals rarely change.
What they follow are
these universal red flags.
The patterns that should
(13:21):
always raise red alerts.
If it's guaranteed,
it's not real.
No legitimate investment
can promise a return.
Markets move.
Risk exists.
Guarantees are what
scammers use to lure you in.
Because it sounds
safe, but it's not.
It's all a lie.
If it's urgent,
(13:42):
it's a trap.
Pressure is
a tactic.
They want you to skip your due diligence,
to buy now, because there's only two spots
left, or these windows
closed tonight.
Real investments
give you time.
Scammers rush you.
If it's vague, it's
probably a scam.
Money loves
clarity.
(14:03):
Scammers
thrive in fog.
Final thoughts.
Scams exist because the dream
of easy money never dies.
But you're not here
for easy money.
You're here for
real wealth.
And real wealth is built slowly,
carefully, and deliberately.
You don't get
rich quick.
(14:24):
You get rich smart.
Protecting your wealth is just
as important as creating it.
Until next time.
Welcome back to another
(00:01):
episode of The Wealth Effect.
Today's episode is about protecting your
wealth because building wealth is only
half the battle.
The other half
is not losing it.
What makes
a scam work?
It's not always
about just a lie.
It's about the way the lie taps
into something deep inside of us.
Our greed, our fear, our
(00:22):
desire for status, our hope.
And the truth is, those
things don't go away.
They live within
us always.
That's why investment
scams keep happening today.
It's not just that we
don't know any better.
It's that sometimes we want
the dream more than the truth.
(00:43):
We're going to go over
nine common scams.
Let's fill
your pocket.
First, the
psychology of a scam.
Scams don't start
with a pitch.
They start
with a feeling.
Maybe it's of
excitement.
Maybe it's of fear.
Maybe it's the rush of
being on the inside track.
(01:04):
Scammers understand this
better than anyone else.
They don't
offer logic.
They offer emotions.
Returns too
good to be true.
A secret investment
that no one knows about.
The opportunity
to be first.
And the pressure
to act now.
These psychological triggers
are what open the door.
And once the door is open,
(01:25):
your money walks out.
Understanding these triggers
isn't just good advice.
It's essential
self-defense.
Because when the heart
races, the mind shuts down.
So when something feels too good, too
fast, or too exclusive, you need to
pause, breathe,
(01:45):
and wait.
Let's get into a
few of these scams.
The first scam is one
of the most iconic ones.
A Ponzi scheme.
Charles Ponzi wasn't the
first to pull this off.
But he became the
name we all remember.
Because in 1920, he promised investors
a 50% return in just 45 days.
(02:07):
His secret was
international reply coupons.
A legitimate
postal arbitrage.
But the truth is, there
was no real business.
Just a money
merry-go-round.
Ponzi wasn't
making profits.
He took money from new investors
to pay off earlier investors.
And as long as people kept investing into
(02:30):
the company, it looked like it worked.
On paper, people
were getting rich.
But underneath,
there was nothing.
Just hype, and eventually,
it all burned down.
Bernie Madoff used the same
playbook nearly a century later.
Madoff ran one of the largest Ponzi
(02:50):
schemes in history,
worth over $65 billion.
He wasn't just some internet
scammer in his basement.
He was a Wall
Street legend.
A former Nasdaq
chairman.
And had built
trust over decades.
And then shattered
it all in an instant.
Ponzi schemes thrive on complexity,
(03:10):
on exclusivity, on scarcity.
They often use technical language,
obscure investment strategies,
and name-dropping
insider networks.
But when you break it all
down, there's one core truth.
If there's no actual product or
service generating value, the scheme is
(03:32):
unsustainable.
Ask yourself, how can I see this
investment actually making money?
Can I verify these claims
through a third party?
Or auditors?
Are there any tangible assets
or operations involved?
But if the answer is vague, or worse,
if they don't exist, then what you're
looking at is
an illusion.
(03:53):
Not an investment.
A real investment
has sustenance.
A scam has
speculation.
Don't get dazzled.
Get clarity.
And if the answers
aren't clear, walk away.
You're not going to
miss out on anything.
Next, a
pyramid scheme.
Yes, they're still
happening today.
They're usually disguised as network
(04:14):
marketing or affiliate business models.
And here's the thing.
Recruiting others into a business
isn't illegal on its own.
But it's when recruitment is the primary
or the only way to make
money in the business.
And that's dangerous.
At a first glance, pyramid
schemes can seem legitimate.
(04:34):
They often start with
a low buying amount.
Maybe $100, $500.
You're told that you'll make that money
back quick by bringing in
just a few more people.
And then those people
bring in a few more people.
The promise
is clear.
Build a team, climb the ranks,
and the money will flow in.
But if you look deeper, are the products
(04:55):
being sold to actual customers outside of
the network?
Or is everyone just buying in
to the promise of future riches?
These scams are
mathematically impossible.
They require
exponential growth.
Every new layer needs more
recruits than the last one.
Eventually, they'll hit a wall, and
(05:16):
the pool of new recruits will dry up,
the money stops, and the
bottoms start to fall off.
The early adopters, those at the
top, might make their money back.
But everyone else,
they're left with nothing.
Or even worse, with debt
because of the investment.
If a business opportunity emphasizes
(05:36):
recruitment over product sales,
if the compensation plan is a maze of
bonuses tied with signing up others,
and if there's more hype
than substance, step back.
That's not a real
business model.
Next is a
pump and dump.
Have you ever seen a tiny, obscure stock
(05:56):
suddenly explode in value after a flood of
social media hype?
On Twitter, Reddit, Discord, everyone's
saying, buy it now,
it's going to the moon.
It's a startup.
It's a pump and
dump scheme.
Here's how it works.
The scammers buy large quantities of a
low-value stock, often a penny stock,
(06:19):
with low liquidity.
Then they create hype, fake news articles,
bots pushing the narrative, influencers
sometimes knowingly start sharing and
spreading the word, the price surges,
and as soon as the buzz reaches a peak,
and average investors start buying in,
the scammers
start to sell.
They cash out, and
the price plummets.
(06:40):
Everyone else, they're left holding the
bag, watching their investment
disappear overnight.
The lesson, don't
chase the hype.
Invest, don't invest
based on your emotions.
Always do your
own research.
If a stock is up 300% in
a day, ask yourself why.
Another one is
(07:00):
advance fee scams.
These typically go, if you just send a
small fee right now, will
release a big payout.
That's the line, or some variations of
it, and is the backbone
of the advance fee scam.
If you're told you've won something,
an inheritance, a grant, a
once-in-a-lifetime opportunity,
(07:22):
all you have to do is pay a small
processing fee.
Maybe it's just
$100, maybe more.
You just need to wire money over,
and then they'll ask for another fee,
and another,
and another.
And by the time you realize it,
it's all a scam, the money's gone,
and so are they.
These scams prey on
(07:43):
desperation and hope.
They flourish in inboxes, DMs,
even fake investment platforms.
But here's the
golden rule.
Legitimate investments don't require
upfront payments to be unlocked.
Another one is crypto
and forex frauds.
Crypto and forex can be real investments,
(08:04):
but with great hype comes great fraud.
Scammers create fake platforms, fake
websites, that look professional,
complete with dashboards
that show fake profits.
You log in, you see the growth, you
get excited, but when you try to
withdraw your money,
(08:26):
suddenly there's a problem.
More verification needed,
more fees, and then silence.
In forex scams,
it's the same story.
Promises of AI trading bots, secret
strategies, guaranteed wins, but behind
the curtains, there's
no trading at all.
(08:46):
Protect yourself by using
only regulated platforms.
Read real reviews, and always test
withdrawals as early as you can.
Because if you can't get your
money out, you are never investing.
Another one is
impersonation scams.
These scammers don't
come with ski masks.
(09:07):
They come dressed
as people you trust.
They pretend to be your bank,
your investment advisor, the IRS.
They spoof phone numbers, forge email
addresses, and mimic
other things perfectly.
They might call you urgently, claiming
suspicious activity on your account,
or email you a link to
(09:28):
verify your identity.
But remember this.
No legitimate institute will ask for your
personal information through a cold email
or unsolicited
call.
Never give sensitive
information to inbound requests.
Instead, contact the institute directly,
(09:51):
using an official phone number.
Enable two-factor
authentication on every account.
Another scam is boiler rooms
and unregistered securities.
Picture this.
You get a call out of nowhere, and a
charismatic voice is
pitching you an exclusive
investment.
It's not available to
the public, they say.
(10:11):
But they think it'd be
a perfect fit for you.
This is boiler
room territory.
High-pressure sales operations
designed to take your money.
They push hard.
They push to
flatter you.
They throw around big numbers
and limited-time offers.
But here's what
they won't tell you.
Most of what they're selling is
unregistered, unaudited, and unverifiable.
(10:34):
Legitimate investments come with
paperwork, with
disclosures, with oversight.
Take your time.
Ask questions.
Demand documents.
If they get defensive or
evasive, just hang up.
And the last one is
social media scams.
You scroll through Instagram and see a
wealth coach leaning on a Lamborghini.
(10:57):
A TikTok trader flaunting
screenshots of six-figure days.
But here's what
they don't show you.
They rented
those cars.
They photoshopped
their bank accounts.
And they have
fake testimonials.
Social media has become the perfect
country ground for modern scammers.
Why?
Because perception is
easy to manipulate.
(11:18):
You can rent a luxury
apartment for a day.
You can lease a
Ferrari for a weekend.
You can buy
followers and likes.
And with a few flashy posts, suddenly they
can look like a millionaire even if their
bank account
is empty.
Many of those so-called wealth coaches
or crypto experts are paid promoters.
(11:39):
They take money from sketchy startups
to hype junk tokens or investments.
They run a pump and dump scheme
using telegram groups, discord chats,
twitter threads.
Once enough followers buy in and drive
the price up, the scammer cashes out and
leaves everyone
behind.
And here's a few common
(11:59):
social media scams.
Fake giveaways.
Which are send one
ETH and get one back.
These are often hacked accounts of
real influencers or celebrities.
Forex and binary
options mentors.
They'll show screenshots of supposed
gains, then offer to trade your money for
you, only to disappear
(12:20):
once the deposit hits.
Impersonation of trusted
brands or people.
Cloned accounts pretending to be major
platforms or well-known figures directing
you to links or
fake investing apps.
Paid discord or telegram groups where
the real product is FOMO and hype,
not financial
(12:40):
insight.
Don't be fooled by followers
or flash or fast talk.
Real wealth is
often quiet.
Smart investors
don't scream.
They analyze.
They research.
They ask the
hard questions.
So next time a crypto bro slides into your
DMs, or a millionaire mentor wants to show
(13:01):
you the secrets to their success, ask
yourself, if they're really making six
figures a day, would they spend their
time pitching to strangers on Instagram?
Here's a few
universal red flags.
Scammers evolve, but their
signals rarely change.
What they follow are
these universal red flags.
The patterns that should
(13:21):
always raise red alerts.
If it's guaranteed,
it's not real.
No legitimate investment
can promise a return.
Markets move.
Risk exists.
Guarantees are what
scammers use to lure you in.
Because it sounds
safe, but it's not.
It's all a lie.
If it's urgent,
(13:42):
it's a trap.
Pressure is
a tactic.
They want you to skip your due diligence,
to buy now, because there's only two spots
left, or these windows
closed tonight.
Real investments
give you time.
Scammers rush you.
If it's vague, it's
probably a scam.
Money loves
clarity.
(14:03):
Scammers
thrive in fog.
Final thoughts.
Scams exist because the dream
of easy money never dies.
But you're not here
for easy money.
You're here for
real wealth.
And real wealth is built slowly,
carefully, and deliberately.
You don't get
rich quick.
(14:24):
You get rich smart.
Protecting your wealth is just
as important as creating it.
Until next time.
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