WHY do Malaysians still fall for scams? Though this is certainly not unique in the world, many countries are fertile grounds for scammers.
Even as countries develop, the scams develop as well and increase in complexity and ingenuity. In every country, there are people being scammed from rich (or at least moderately well-off) to poor.
In Malaysia, the total amount of losses from scams adds up to over hundreds of millions of Ringgit per year!
So why do Malaysians still fall for scams and what can you do about it?
1. You trust your friends. While trusting your friends is the normal thing to do and admirable in most cases, it is also what scammers behind money games depend on to grow their pyramid.
It is exactly because we trust our friends, that we let our guard down and think less critically, which is when you fall for a scam.
Trust your friends on everything, except money and investments. Reduce the risk by asking many friends for advice, don’t depend on one.
2. You are smart. But you can’t be smart in everything and in some areas you will be “information poor”, which makes you a potential victim. Who can tell whether your dentist, car mechanic, plumber, painter, electrician or graphical designer is overcharging you or not? Remember: you are never too smart to lose money.
In Malaysia, even prominent people are known to have lost money. In the US, Steven Spielberg, Larry King and John Malkovich were among the many rich investors who were financially ruined by Bernie Madoff’s Ponzi scheme.
3. You are a little criminal. Yes, the scammers are the big criminals, but they get a lot of help from their victims, who all are too willing to be small criminals.
Buying smartphones at (legally) impossible prices, sending cheques to unknown persons in sketchy countries, investing based on private information, it all reeks of breaking the law. If you got your money back from a money game because you had a lot of downlines, you are not without guilt.
Your “return” didn’t come from an anonymous pile of money, some smart investment or the stock market. The money you received came from the hard-earned savings of common Malaysians, who came slightly later in the money game than you, trusted you and were slightly more naïve than you.
You are the accomplice and many times you are venturing in grey and borderline illegal territory to make money. Which is why so many scams are underreported to the police: because we are shy to talk about our own role in the scam.
Try this test: if you are not willing to have your role in the scam described in the newspaper, perhaps you shouldn’t do it.
4. You don’t listen. You try to drown out that little voice at the back of your mind that is telling you “this is too good to be true”, “this is illegal, “this is sketchy”, “20% returns per month is impossible”.
Try to listen to your inner voice more often. The only business that can generate 20% monthly returns is a loan shark. If you make that return, you are the shark.
5. You are scared (to lose out). And why don’t we listen to that little voice? Because we are scared to miss the opportunity of a lifetime, to miss out on that one opportunity that could see us get rich beyond our wildest dreams and fulfil every dream we ever had in our life and show the rest of the world: "Look! I’ve made it."
We are scared to lose out because we are greedy and greed is the one thing that is almost impossible to weed out.
6. Scare tactics work! Other scare tactics are easier to avoid if they wouldn’t scare you so much!
Whenever you are out of the blue asked for money or personal information because your (bank) account has been hacked or the tax authority demands you to pay up or be arrested and jailed, be very sceptical.
Your attempt to fix the situation might actually be the start of your problems! Banks and governments don’t just call you and ask for your personal information, scammers do in order to hack into your accounts.
I was recently asked during a radio interview whether scams will ever be a thing of Malaysia’s past. Any answer has to take into consideration the various reasons people still fall for scams, such as the once I described above.
Although increasing financial literacy can definitely lower the damage that scams are doing, it is naïve to think we can eradicate it altogether.
Scams simply appeal too much to our basest of human emotions: greed. But trying not to fall for scams and warning people against them, absolutely has its merit and every bit of help is a step in the right direction.
Mark Reijman is co-founder and managing director of https://www.comparehero.my/ dedicated to increasing financial literacy and to help you save time and money by comparing all credit cards, personal loans and broadband plans in Malaysia.