Who can you trust?

It’s a question we’re asked all the time. Can I trust this company? Can I trust this investment scheme? Can I trust this person trying to sell me something?

The answer is usually quite simple. If you’re already suspicious enough to ask the question then you should trust your instincts. At least until you’ve checked.

So are there obvious clues that tell us if a company is untrustworthy? What are the hints that indicate a company or a person shouldn’t be trusted with your money?

Some are obvious. For instance, if anyone ever tries to recruit you into a scheme that involves you then recruiting other people to make money then you should turn around and walk away immediately. They’re trying to recruit you into a Multi-Level Marketing scheme or, worse still, a pyramid scheme. Either way you’re not going to make any money from such a scheme for the simple reason that nobody ever does, apart from the people who first create them. This is certainly the case with the biggest of the MLMs, Amway and Herbalife. Their own data, the data they’re required to publish in the USA and the UK shows that the vast majority of recruits either make no money at all or make a loss by joining the scheme. The lucky ones at least get a kitchen and bathroom full of expensive products or a bloodstream full of worthless supplements, the unlucky ones end up penniless.

It’s even worse with the true pyramid schemes. These are the ones that make me angry. We’ve had intelligent, professional, smart people crying in our office following their experiences with pyramid schemes, having lost vast amounts of money. Only after they joined have they realized that there is no actual product and they only chance they have of making a return is to do their best to recruit the people dearest to them, damaging every relationship they’re in.

What about investment schemes? I’m not a financial expert but I know that any scheme offering more than double the interest your bank offers is suspicious. Here’s another clue. Any investment scheme that quotes interest rates per day rather than per year is a scam. One more clue for you. Any investment scheme that doesn’t clearly state how it will make money for you can’t be trusted.

The Eurextrade Ponzi scheme that collapsed last year had all of all these clues. The people recruited into this scheme lost fortunes, having been persuaded they could make extraordinary profits from “investing” their savings. Unfortunately they either didn’t see the clues or they were willfully blind to how obvious they were. Can anyone really believe that interest rates of 3% per day are possible?

I think it’s also fair to look for clues about a company in the way it appears. While we shouldn’t judge a person by their appearance I think we can, even should, judge a company by its appearance, in particular superficial things like the state of its office, web site and even its address.

We’ve been asked on several occasions over the years to comment on recruitment companies, car importers and investment companies that, it’s soon emerged, seem to operate from someone’s sitting room. I’m certainly not saying businesses can’t operate from someone’s home, almost all businesses start that way, but there comes a point when businesses that want to be seen as respectable rent an office, get a phone line and register an internet domain name. If they want to be treated seriously.

Understanding that consumers are increasingly skeptical some scammers invest serious time and effort into looking legitimate. The fake university business is a good example. They have very slick, professional-looking web sites that look just like what you would expect from a leading-edge university. However there’s only so much they can do to cover up the biggest clue about the scam they’re selling. Sooner or later, in an email or an online chat session you’ll see a statement like this one: "No need to Study, No Classes to attend, No Exam to take."

Isn’t that clue enough? You can be awarded a degree without actually doing any work to get it?

I saw that quote in an email from the so-called Johnstown “University" which despite claiming to have been "Established in 1991" and to have established "its online education system ... in the year 1996" only registered their domain name on the 14th April this year.

A degree from one of these “universities” isn’t just a fake degree, it’s a fast-track, first-class ticket to dismissal and prosecution. Getting a job or a promotion based on a fake qualification is stealing. You’re as much of a crook as the people selling them if you have one of these fake degrees. If you have one you should resign now before you’re caught.

Above all I think we’re entitled to judge a company by the biggest clue of all: its reputation among your family, friends and colleagues.

You think I’m going to say you should trust the companies these people trust? In fact I’m suggesting you shouldn’t necessarily trust them. Remember that it’s often your family and friends who try to recruit you into their latest Multi-Level Marketing scheme. Many people I know who were recruited into pyramid schemes like TVI Express and World Ventures were recruited by their nearest and dearest. Many people were introduced to Eurextrade by their workmates. The sad news is that when it comes to scams you can’t trust the people you know.

The sad news is that reputation alone isn’t enough. If it was, we’d all be poor by now. What’s matters more are facts. Before you decide to trust anyone, do your research.