When is a Scam a Scam?

by Joe Plemon on August 4, 2010

Have you ever been scammed? When and how? And was it really a scam? While most of us know a scam when we see it (an unsolicited email asking you, in broken English, to help transfer a million dollar inheritance from a Nigerian account), not all “scams” are that easy to spot.

For example, if you pay a $495 fee to attend a seminar which will teach you to start your own million dollar business, would you consider it a scam if your own million dollar business never materialized? If you pay $1250 for a windshield repair business, but never recaptured your investment, were you scammed? What about an investment seminar which, after following the savvy tips you learned, you lose your shirt?

Dictionary definition of “scam”

The dictionary definition of “scam” is to obtain money from someone by dishonest means. The key word in this definition is “dishonest”.  Admittedly, knowing another person’s motives is a subjective matter, but we often spend money on items, training, books, etc which don’t deliver what we expect. Were we scammed?  Not unless dishonest promises were made.  We might even make shady investments (such as life settlement investments), but we can’t cry “scam” as long as the broker is forthright and honest.

Rethinking “scam”

Career coach and author Dan Miller, in his post, “Is this a scam?” states, “I have purchased thousands of dollars worth of seminars, workshops, training programs and building opportunity products over the years. I consider this an integral part of my ongoing learning process. Yes, I have a library of “millionaire” tapes that provided little useful information, “business opportunities” that consisted of photocopied government forms, teleclasses where there was too much background noise to hear the presenter and hot cashew vending machines that quickly produced moldy products. But I have never considered that I was ‘scammed’”.

Throughout our lifetimes, most of us will purchase books or attend seminars which guarantee an improved life. Sometimes we can easily see a good return on these expenditures, but more often we are not able to document a return. Was it all a waste or is it all part of a learning experience? How much did you spend for your college education? Was every single course a money maker for you or were some courses a waste of time (and money)? Do you consider such courses as scams? Probably not.

I paid several thousand dollars to receive the training to become a Dave Ramsey Certified Counselor. By opening my own business and using the skills I was taught, I have been able to earn that training cost back many times over. However, had I put my training manual on a shelf and expected the world to come knocking on my door, I am certain that the return on my training investment would have been nil. But even then, no scam would have occurred.

A Challenge

I challenge you to ask yourself: “What is worse, spending time and money on a possible opportunity that never worked out, or avoiding all learning opportunities because some of them turn out badly?”

Again, from Miller, “If you never attend a seminar, never purchase a website, never invest in a business opportunity, never buy a get-rich book, and never feel you got less than what you expected – you’ll probably never get any results that are different than what you’re already experiencing.”

Maybe it is time to rethink getting scammed. If we become so paranoid about being scammed that we avoid all risks, we are insuring a dull and mediocre life.

Miller concludes his post with this bottom line: “There’s less risk from getting ‘scammed’ than there is from doing nothing.”

Creative Commons License photo credit: PetroleumJelliffe

How about you? Have you ever been scammed? What did you learn from the experience? Do you agree with Dan Miller’s bottom line? Why or why not?

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{ 8 comments… read them below or add one }

Invest It Wisely August 4, 2010 at 8:28 pm

I don’t remember ever being outright scammed on something, but these timeshare folks in Phuket certainly wasted 3 hours of my life in trying to get me to spend thousands of dollars on their club. It most certainly would have been a scam had I gone for it.

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Squirrelers August 4, 2010 at 11:50 pm

I took a guys trip to Las Vegas a few years back, and one of my longtime friends wanted to hear a timeshatch. I didn’t want any part of it, but I went along with him to be a good sport. Anyway…,needless to say, it was just the slick sales pitch I expected. My friend was unnervingly captivated by the pitch, until I got him to leave.

It may have been a ‘scam’, but I learned something in the process. Mainly, how smooth and coordinated these pitches are, and how som e people, including my friend who has quite a bit of common sense, can be influenced so quickly. Worth my time as a onetime educational experience.

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Roshawn @ Watson Inc August 5, 2010 at 12:22 am

I agree with Dan Miller. I’ve heard him address this issue before. Unfortunately, I have been truly scammed before.

http://www.roshawnwatson.com/2010/03/how-i-got-scammed.html

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Glass Is Half August 5, 2010 at 4:15 am

I’ve had family members and friends scammed before so am intimately familiar with it. Unfortunately as another of your commentators has pointed out, they are extremely “slick” and good at fleecing money from the unwary.

However something you said in this article caught my eye to some extent and I hope you don’t mind if its a bit “off topic”?

With regards to the Dave Ramsey training you received – where/how did you get this? Is it something that is available remotely and could you tell me if it is US Centric (i.e. really only applies to products/services that American companies can provide) or something that can be applied elsewhere? Based in the UK, I’d love to be able to educate people on how to save money and budget properly the “right way” and from everything I’ve heard Mr. Ramsey is definitely one of the leaders … however I’m not sure how well known he is over here though which is something I would need to check into.

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joeplemon August 5, 2010 at 7:57 am

@Invest it Wisely,
Yes, time share presentations border on the scam side. I have never been through one, but if they knowingly lie, it could be considered a scam. I counsel people regularly who own these things and can’t figure out how to get rid of them.

@Squirrelers,
Good thing for your buddy that he had you with him. And, as you said, you can chart this one as an educational experience.

@Roshawn,
Even when one is “truly scammed”, it is still a learning experience that will help you going forward. Right?

@Glass is Half,
Don’t worry about being “off topic”. After all, I brought the Dave Ramsey training up in the first place.

To answer your questions: I received my training at Dave’s headquarters in Nashville, TN in June of 2006. Fortunately for me, I live only a three hour drive from Nashville, so attending was quite convenient. Our class had about 40 attendees in it, and some were international (maybe one or two). While some of the material is US Centric (bankruptcy, credit collection practices, estate planning, etc), the principles can be applied anywhere. I suggest you contact his organization at http://www.daveramsey.com to get more clarity about becoming a counselor. A much simpler idea would be to host a Financial Peace University class at your church or community center. You don’t need any previous training to be a facilitator and the class is a great help to all who attend. Besides, you will learn too! 🙂

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joeplemon August 5, 2010 at 4:44 pm

Janette,
My hunch is that following someone else’s advice wasn’t the real issue. We do that all of the time. But doing so when you feel very differently…that can be a problem. I know I have had that gut feeling before that I know I should listen to. Sometimes I do and sometimes I don’t, but learning to “trust your gut” (not very sophisticated language for a personal finance blogger) is important.

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Dollars Not Debt January 21, 2011 at 11:37 pm

I have been following Dave Ramsey’s plan for about 2 years and I will be 100% debt free in August of 2012. House and everything! The plan works–but only if you are focused and have self-control. I will have paid off a total of $100K in the four years. I talk about my path to debt freedom in my blog.

Dollars Not Debt

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joeplemon January 24, 2011 at 2:00 pm

@Dollars,
Wow! You are cooking! Were you able to pay off that $100 K totally through your budget, or did you sell some stuff? Either way congratulations!

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