Lessons from the 7 Biggest Sales Scams of All Time
We all think we’re too smart to ever be duped by a phony salesperson or fake pitch. Unfortunately, even today, we can easily still fall prey (take the Bernie Madoff scheme, for example). Small-business owners work too hard to have their money swindled away. Here are the top sales scams people actually got away with—that is, before they eventually got caught—and what we can learn from each:
1. The Brooklyn Bridge Scam
The Scammer: George C. Parker
The Victim: Wealthy New York tourists
In the early 1900s, George C. Parker "sold" the Brooklyn Bridge and other famous New York structures as often as twice a week. If you’ve heard the old line, “If you believe that, I’ve got a bridge for sale,” you know where it comes from.
Takeaway: If it's too good to be true, whether it's a consultant's rate, an investment opportunity or a new product, it probably is.
2. The Craigslist Scam
The Scammer: Fake telemarketers
The Victim: People selling cars
Placing an ad on a free site like Craigslist to sell your car usually results in selling your car. However, sellers may also receive calls from unlicensed telemarketers who, for a fee, offer to help sell your car. If you accept their offer, you’ll end up paying a fee of about $500 for posting to online classifieds you can post yourself at no charge.
Takeaway: Don't pay for something you can get for free. A number of free high-quality services are out there—just think of WordPress or all the Google apps available.
RELATED: 8 Tricks from the World's Best Salespeople
3. The Estate Sale Scam
The Scammer: Offshore (and some domestic) scammers
The Victim: Anyone with email
This is based on one of countless Nigerian email scams. In this scam you are told that one of your lost relative’s estates has been sold for millions of dollars. To claim your stake of $3M US, you simply need to pay $800 to release the funds. You, of course, never hear from the company or individual again, let alone receive any money.
Takeaway: It’s hard to believe anyone falls for this anymore, but it raises the question: Do you really know that person you’re emailing or tweeting with? It’s easy to create an online persona, but the only way you’ll know if people are truly who they say they are is by meeting them.
4. The Work From Home Scam
The Scammer: Fake employers
The Victim: The unemployed
Most of these scams masquerade as ads, blogs or even news stories that talk about how easy it is to make thousands of dollars a week working from home. There’s either a “one-time cost” or a monthly fee to get materials, “insider info” or connections to companies looking for stay-at-home workers. The information is useless and your credit card will continue to be charged even after you stop your enrollment. Nightmare.
Takeaway: We all love shortcuts and want to make a lot of money, but there's no such thing as a shortcut to the top—if there was, wouldn't more people be there?
5. The Salted Gold Mine Scam
The Scammer: Owners of valueless mines
The Victim: Speculators
This is an oldie but goodie. Back in the day, dishonest mine owners would put a few gold nuggets in worthless mines to convince prospective buyers the mines contained a ton of gold so they could get them to buy their claims. As the story goes, some old-time scammers even used to fire shotguns loaded with gold dust into the sides of the mines to ensure buyers were fooled.
Takeaway: Thanks to technology, we don’t have to take anyone’s "word for it," because there’s a wealth of information available to you, if you do your research. Don’t buy anything without at least checking out a seller’s online reputation.
6. The Milli Vanilli Scam
The Scammer: Mili, Vanilli and the production team
The Victim: Your ears
This pop duo tricked the world by lip-syncing every song they sang. We bought what they were selling, or rather singing, like mad. We ultimately found out the music was real but they were fakes. They couldn’t sing at all. But man, they could dance.
Takeaway: Don’t lie. You will always, always get caught—maybe not today, or tomorrow but eventually the truth always comes out.
7. The Ponzi Scheme
The Scammer: Charles Ponzi
The Victim: Countless investors throughout time
In the 1920s, Charles Ponzi tricked thousands of New England residents into investing in a postage stamp speculation scheme. At that time the annual interest rate for bank accounts was just 5 percent, but Ponzi promised investors that he could provide a 50 percent return in 45 days and a 100 percent profit in 90 days. He continued to convince people of its success by taking new investors money, and giving existing investors the money to show the high returns. He would then get them to invest more and use the money to pay off other investors. The whole time he was skimming money off the top for himself. The whole scam fell apart when he couldn’t get enough new investors to keep up with the demand for returns. And, of course, as with most scams it sounded too good to be true, yet people bought into it anyway, and lost their life savings.
Of course, sometimes we never learn … Bernie Madoff pulled this scam and people lost billions of dollars.
Takeaway: You work hard for your money; invest it in yourself and in your business first. If you're handing it over, make sure you know where it's going.
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