Money Management
November 11, 2024
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The 2023 State of Omnichannel Fraud Report released by TransUnion reveals that 42% of Kenyan consumers reported being targets of fraud between September and December 2022. The numbers are rising, and chances are, you might be the next target.
Scammers continually innovate, devising fresh and increasingly efficient methods to deceive you into parting with your money. Equipping yourself with awareness of their latest strategies is the most effective way to protect yourself.
This article will explore eight online scams robbing Kenyans and how to protect yourself against them.
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In this scam, individuals are duped into paying an upfront fee with the promise of receiving goods, services, or money in return. However, once the fee is paid, the promised benefits never materialise, leaving the victim out of pocket.
In advance fee scams, scammers aim to manipulate your emotions and create a sense of urgency and excitement. In most cases, they'll typically weave a convincing narrative, making you believe you must pay to access a substantial sum of money or a valuable product, or the deal will fall apart. The fraudsters may claim they need money to cover expenses such as taxes, transportation, or release fees.
Scammers thrive on exploiting people's desires for free cash, easy money, or incredible offers. The best way to protect yourself is to trust your instincts and remember nothing is free. Second, always conduct comprehensive research. Reputable people and organisations won't ask you to pay an upfront fee to receive something for free.
Read Also: 7 Advance Fee Scams and How to Beat Cons at Their Game
The surge in online shopping popularity has brought along a surge in e-commerce scams. Fraudsters create fake websites and social media pages that look eerily similar to legitimate online retailers, making it tricky for consumers to discern the difference.
Fraudsters employ cunning methods to deceive unsuspecting online shoppers. The main ones include:
Protect yourself from these scams by being vigilant for red flags. Avoid "too good to be true prices," unsecured websites missing "https://" in the URLs or with shabby design, and online retailers with bad reviews and limited contact information.
Finally, remember that legitimate sellers offer options like paying for delivery or pickup points. If unsure about a seller's legitimacy, trust your instincts and refrain from paying for unseen products.
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Pyramid schemes and Multi-Level Marketing (MLMs) are the most common investment schemes online.
Pyramid schemes focus on recruiting new members rather than selling products or services, while MLMs emphasise product sales and may involve some legitimate business activities. However, both models rely heavily on recruiting new members online to sustain their operations, often resulting in financial losses for participants.
Scammers involved with MLM and pyramid schemes often use social media to find potential recruits. Their pitches typically involve claims that they can help you make money on social media, become your own boss, or take control of your financial future.
Typically, the company will try to lure you into becoming a victim in three ways.
The most common one is asking you to pay a subscription or registration fee to get started. The second way is they will ask you to buy the products you will sell at wholesale prices, and they’ll ship them to you.
The third and new way is to invite you to a conference or training seminar where you will be taught how to get customers and sell the products. These investment scams are typically planned by people calling themselves “youth mentors,” “business marketers,” and “investment experts.” In reality, they are not licensed to offer investment advice or sell investment products.
When you attend such conferences, you will typically pay between Ksh300 and Ksh1,000 to buy tickets and extra money for food and merchandise. This seminar can pull over 500 participants— each conned Ksh300.
Before investing in any online opportunity, conduct thorough research on the company, its products, and its compensation plan. If an offer promises extraordinary returns, asks for registration/subscription or training fees, and involves recruiting other people to make money, it's likely a scam, and you should not invest in it.
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Romance scams happen when someone believes they have made a connection with someone they met online. But in reality, the person they are talking to is a fraudster using a fake profile. The scammer manipulates or grooms their prey to gain their trust for some time, and ultimately, they can ask them for money convincingly.
The scammers often claim to be rich or from wealthy, prominent families. They typically try to establish a relationship quickly, gain their victim’s trust, meet them, and sometimes propose marriage. Scammers often move quickly to build emotional intimacy through love bombing and revealing a lot of information about themselves.
After establishing trust, scammers may request financial assistance. These requests could be for covering medical emergencies, legal fees for themselves or family members, or business investments with promises of immediate repayment. However, victims never receive repayment, and scammers may continue to solicit more funds.
To avoid romance scams, approach online relationships with scepticism, verify profiles, don't give out personal information, and take your time getting to know someone. Don't rush into emotional attachments, and do not send money to strangers regardless of their sob stories or promises of repayment.
Investment scams are designed to deceive individuals into handing over money. They often appear legitimate, with professional-looking websites, testimonials, and marketing materials.
One of the most well-known types of investment scams is the Ponzi scheme. In this scheme, money from new investors is used to pay off existing investors. This cycle continues until the amount of money owed exceeds the amount of money being collected, leading to the scheme's collapse and leaving all investors with losses.
Today, most investment scams happen online and are easy to spot.
They are often disguised and sold as quick, easy, and low- or no-risk opportunities to make money. These scams often involve real estate, cryptocurrency, agri-business, or gold investments. Scammers frequently employ phrases like "proven" and "guaranteed," accompanied by testimonials from supposed successful investors.
Scammers often start by requesting a small initial investment to access exclusive investment opportunities or to participate in a limited-time offer. This initial investment serves as a bait to hook the victim and make them feel like they're part of an exclusive group.
From here, they reinforce the illusion of legitimacy and encourage further investment. Ultimately, victims are left with no access to their invested funds and no recourse to recover their losses. Scammers vanish, leaving their targets devastated and financially burdened.
To avoid falling victim, thoroughly investigate the investment opportunity, the company behind it, and the individuals involved. Ask for operating licenses, visit their offices, and consult an expert before investing.
Read Also: The 10 Golden Rules of Investing You Should Know
These scams often involve an impersonator posing as a well-known celebrity, typically a politician, news anchor, or popular figure, who promotes a lottery or online competition. The scammer's social media accounts or email addresses may closely resemble the celebrity's, adding legitimacy to the fraudulent scheme.
Victims are invited to participate in the fake lottery or competition, and when they do, they are notified of their "winnings." However, to claim their prize, the victim is instructed to pay an upfront fee, often disguised as taxes, shipping and handling charges, or processing fees. The scammer may even provide a fake invoice or official-looking document to further enhance the illusion of legitimacy.
Once the victim sends the money, the cycle of demands continues, with the scammer constantly requesting additional fees to cover purported logistical hurdles or administrative expenses. In reality, no prize exists. The scammer aims to extract as much money as possible from the victim before abandoning the ruse and disappearing.
To safeguard against these scams, it is crucial to exercise caution and vigilance.
Have you ever received an unsolicited job offer via text message, email, or social media DM? Was the offer promising a high, attractive salary while working from home, with little effort, no interview, experience, and a quick hiring process?
After accepting the offer and applying, did the recruiters ask for a bribe, uniform fees, recruitment fee, or for you to buy training materials before you began the job?
If you have ever received such a job opportunity, it was most likely an employment scam.
Job scams are rampant online; anyone from Facebook to LinkedIn can be tricked into one.
Legitimate job opportunities will never ask for registration fees, bribes or require you to purchase uniforms/equipment upfront.
Even if you are contacted unsolicited, the company should be able to identify themselves clearly, and their authenticity should be verifiable. Authentic job opportunities will not pressure you to accept a position immediately or rush through the hiring process.
Finally, legitimate job postings will list specific requirements you must meet and provide a way to prove your qualifications.
Read Also: 5 Warning Signs That You Are Being Ripped Off
A fake loan app scam is a type of fraud in which criminals create and promote fake loan apps to solicit money from unsuspecting victims. These apps often appear legitimate and may be listed on the Google Play Store. The app promises quick and easy loan approval and high limits even with poor credit.
Once you have downloaded and installed the fake loan app and completed the KYC process, the fraudsters will ask you to make a deposit or upfront payment in order to process the loan application. Once you do this, the criminals will tell you your application has been rejected, disappear, and you will never receive a loan.
When looking to take a digital loan, use legitimate lenders who follow the correct loan application process, including checking your credit score and not asking you to pay any upfront fees. Additionally, avoid downloading apps from third-party app stores or websites. Finally, research the lender and read reviews to ensure they're legit.
Read Also: How Kenyan Law Protects You When Taking a Mobile Loan
Do you suspect you've fallen victim to an online scam? You need to act fast.
First, protect your accounts by securing social media, email, mobile money, and bank accounts and changing passwords. Second, freeze your card/lock your sim card and notify your financial institution, mobile money service provider, and affected companies immediately. If you sent the scammer money, inquire about the possibility of a reversal.
Finally, you may need to file a report with your local police. This will help you if the scammer has stolen your personal info or hacked your social media account and is about to impersonate you to commit more crimes.
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