people are more aware of financial fraud than ever before from crypto influencers to suspicious
looking text messages we are all trained to be on the high alert about everything unfortunately the
fact that we now suspect everything is a scam is a big reason why financial fraud is at an alltime
high I lost the majority of my life savings in a dating scam well you're tightening the belt this
year and saving money but there are a handful of growing scams that are designed to steal
your money dating scams where fraudsters convince people to put their money into fake cryptocurrency
Investments but in 2023 the scams are a lot more sophisticated than you may have realized Society
loves con artists don't believe me think about this we are all celebrating Sam bakman freed being
convicted of defrauding millions of investors out of billions of dollars for now but the same crypto
Enthusiast that lost money when FTX collapsed probably at one point or another celebrated
the wealth and excess of the Wolf of Wall Street another convicted fraudster who stillo millions
of dollars from investors the future is clear in 40 years the insufferable hustle Bros will
be liking inspirational quotes pasted over the top of s SPF okay that might be funny to think about
but it happens all the time the reporter Aaron Griffith with the New York Times wrote about the
hundreds of fake companies with fake business plans and fake users being created to attract
venture capital investment firms like Sequoia and dreon horowits and Excel had so much money
that they couldn't invest into new ideas fast enough they started to encourage Founders to
fudge their numbers a bit to get a life-changing investment there were companies that used that
money and did build out a real business but there were other companies that had to keep on lying as
more and more investors piled in if you were a company founder trying to be completely honest
about your business you would have found it much harder to get an audience with these investors to
pitch your idea because you were competing with other Founders who weren't afraid to stretch the
truth or flat out lie to tell investors what they wanted to hear the Venture Capital firms
that lived by the Silicon Valley Mantra of growth at all costs didn't even care because even if the
companies they were invested in never made a profit they could hype them up enough to sell
them to strategic investors or dump their trash on the general public through a spack cases like
Charlie Javis who faked millions of users on her app Frank before selling it to JP Morgan
for $75 million or Abraham shafi's IRL another app that had millions of daily users that raised
$150 million at a$1 billion valuation before an investigation by the board found that 95% of its
users were also completely fake from just these two fake apps that is a total of $325 million that
could have been invested in real startups but there are five reasons why fraud beats honesty
almost every time the first reason that fraud has done so well even though people are more aware of
it than ever is because nobody bothers checking anymore while good honest companies and people are
held down with honesty and regulations scammers and frauders can just lie about how great their
business is the reason that they can get away with this for so long today is because fewer people are
checking according to the remarks of their own administrators organizations like the Securities
and Exchange Commission Federal Deposit Insurance Corporation and the Federal Trade Commission don't
have enough resources to regulate Market activity according to the SEC enforcement results from 2022
the agency is now relying mostly on whistleblowers to prosecute pump and dump schemes Securities
manipulation and insider trading now you all know about government Regulators being underfunded
but the private sector also failed as well FTX Theos and we work all rais billions of dollars
from sophisticated investors that did very little due diligence to verify the lofty claims of the
founders low interest rates a hype around Venture Capital investing and the growing popularity of
spaxs meant that there was a lot of investor money looking for the next big thing Ecentric Founders
had the luxury of shopping around for investors who were all desperate to get their money into
whatever company was generating the most buzz and the companies that could generate the most
Buzz were the ones that could just lie about doing something that could change the world if only it
were true from my personal experience working as an investment Banker in the healthcare space less
exciting companies that are honest about their realistic objectives are drowned in due diligence
by more experienced private Equity professionals while companies making wild claims about changing
the landscape of the medical world are waved through by Venture capitalists that think they
are much smarter than they really are now big companies are getting ripped off by founders
with questionable attire but that's not where most of the fraud is happening most fraud is targeted
at regular people and even if they don't make any dumb mistakes themselves off floating the cost of
scams on a people has become more lucrative than ever thanks to two other concerning Trends so it's
time to learn how money Works to find out why the world thinks everything is a scam except for scams
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sophisticated investors knew the risks of doing no due diligence and investing hype is finally
shifting away from firms promising to be the Uber of in-office Kombucha Taps but people suspecting
everything of being a scam apart from scams the Paradox of the grift if you will does a lot more
harm to normal people who don't have the time or resources to thoroughly vet every offer they
are given the people being hurt the most by these smaller scale frauds are not who you would expect
the most common victim of financial fraud is not elderly people with deteriorating mental capacity
getting targeted by scam callers claiming to be the IRS according to data by the FTC these scams
do fool millions of people every year and more should be done about that to educate and protect
people at risk it sucks that every single email text message and phone call needs to be analyzed
for sketchy links and it can be exhausting but at least it's possible with a bit of attention
to stay on the right side of these scams but the fastest growing category of financial fraud is
much harder to protect yourself against and to show you why we need to talk about influencers
seeking fame and fortune is nothing new and people running get-rich quick schemes on Late Night cable
are nothing new either but technological and cultural changes have allowed these people to
merge into one I don't want to reveal my age here too much but back in my day celebrities
were afraid of being labeled as sellouts they had to be very tactful about promoting their merch or
their fans would turn on them today selling out is the goal modern celebrities and influencers
are celebrated for launching a new product line and go on interviews where they talk extensively
about how much money they make there is nothing wrong with celebrities making money and some
influencer businesses sell great products but a lot don't and a lot get much worse according to
a 2021 survey conducted by the FTC on consumer losses through scams 61 % of all fraud contacts
initiated on social media and websites email online ads phone calls and text messages were
all fighting for whatever was left the people you watch and Trust online are by far the most likely
to scam you influencers know that their influence won't last forever tastes change their audience
will outgrow their content or they could be caught up in controversies that gets them kicked out of
their respective platform that show business but the problem for the new age of celebrity
is that the Antics that they self-publish onto the internet would make it imp possible for a lot of
them to get a real job afterwards so they need to make enough money in their few years of Fame
to fund their lavish lifestyle forever it's not impossible to do legitimately but it's much easier
to do by jumping on the latest trends if you are an influencer and you know your audience is
eventually going to get bored of you anyway it's very tempting to make as much money as possible
off them on the way out and that's the second reason why people think everything is a scam apart
from scams fraud is exciting reality is depressing imagine you had 10 ,000 to spare and you are
deciding where to put it a black rock broad market exchange traded fund or a crypto token
from a YouTuber I really hope you all watching know what the right choice is on a different
corner of the internet you will see people hyping up very risky plays to an impressionable audience
while making laser eye video thumbnails about how Black Rock secretly rules the world one of
the biggest business and finance influencers in the world Patrick Bet David has made countless
videos talking about the dangers of Vanguard Black Rock and State Street while defending
multi-level and Network marketing including his own multi-level marketing life insurance
company black rock is not a faultless business but your money will be safer with them than it
will be with the average influencer my friend Richard over on the plane Bagel made a great
video about why investing won't make you rich it can only build wealth by accelerating diligent
savings but that's boring and that kind of content doesn't make as much money or perform as well with
the algorithm as flashy displays of material wealth and non-compliant claims about making
money even influencers not pedaling get-rich quick schemes need to over sensationalize everything to
maximize engagement I know I pick on Graham a lot but judging by his thumbnails this guy has been
bankrupt four times this year alone influencers are an easy target for ridicule and I understand
as a now full-time YouTuber myself it's tempting to use the flames and laser eyes but it all
builds a culture of getting as much attention as possible as quickly as possible and then trading
that influence for cash the biggest problem is that there appears to be very few consequences
for doing this people like Logan Paul who at the height of the cryptocurrency Mania promoted
several pump and dump schemes has to date had no problems with Regulators who are struggling to
keep up in this area as well he also hasn't even taken that much reputational damage and still has
millions of fans watching his videos and buying Prime energy drinks another friend of the channel
Patrick Bole in an interview with Zeke Fox an investigative reporter for Bloomberg an author of
number go up said that the grift is not something to be embarrassed about anymore it's now seen as
high status because the most visibly High status people are all doing it FOX also claimed that
investigations into this matter almost don't make sense anymore because the perpetrators of this
kind of fraud are so unashamed and open about it that an investigative journalist doing an expose
on dink doink would be like a food critic writing a review on Taco Bell and that's the third reason
why we think everything is a scam apart from scams fraud moves faster than we do new technologies
like cryptocurrencies Ai and the internet all may have legitimate marketable uses but it can
take years for people to figure out what those use cases are and and years more to build businesses
around them it's Little Wonder then that the new technologies are a golden opportunity for fraud by
promising to know the secrets to using something new to make lots of money grifters can Leverage
The Natural hype of barely understood Tech to sell a guide on how to use it for a profit the hustle
Bros that were selling crypto trading guides when Bitcoin was entering the mainstream are now
telling you how to use chat GPT to make millions by automating some vaguely legitimate sounding
online business this problem hits every level of Finance not just course Gamers The Venture
Capital funds that were throwing investor money at blockchain companies are now throwing investor
money at anything that claims to use Ai and the influencers that were crypto experts now know
how to use chat GPT to make $300 a day the rapid pace of new technologies that people
are desperate to understand is behind the rapid pace of new frauds pretending to know the answers
the reason that people are so desperate for the answers is also the fourth reason that they are
so willing to convince themselves that a scam is not a scam people are desperate I don't need to
say too much about this one according to Lending Club data 62% of Americans are living paycheck to
paycheck nobody earning minimum wage can afford to rent a basic two-bedroom apartment anywhere in
the country people have to jump through up to 17 interviews to get a job interest rates are
rising Basic Essentials are twice what they cost 5 years ago and most people don't think there is
any hope of changing that the housing crisis in the United States is real it is incredibly
difficult for people to buy a home sad as 4 in 10 consumers consider themselves worse off than
last year anything promising a way out of a no hope situation looks good to a lot of people the
fifth reason why we now think everything is a scam apart from scams is because the outlets that were
supposed to be keeping us informed about this have also decided that there is more money in
sensationalism go and watch the 200-year decline of Journalism over on how history Works to find
out how we let that happen I am also going to be writing a full article on fraud culture
in finance from the perspective of a former investment banker so if you want to catch that
other articles written by myself and some of the best Finance creators make sure to sign up in my
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