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ScamProofYourAssets Articles and Resources

Is Bitcoin a Scam? Scam-Proof Your Assets

Scam-Proof Your Assets: Guarding Against Widespread Deception, my newest Rich Dad Advisor book in several years, was released near the end of 2020. Cyber criminality is everywhere, costing people not only financial losses but emotional damage as well. You must be vigilant.

To learn the protective strategies you need against the cyber onslaught you may purchase the book from the RDA Press website.

I couldn’t fit all of the scams into Scam-Proof Your Assets. So the following excerpt isn’t in the book but is important for you to know.

While some frauds become harder to perpetrate due to better oversight, others become easier thanks to technology. One type of fraud that didn’t even exist just a few years ago is that involving cryptocurrency.

To illustrate what this is, let’s establish right now that currency is something that at least two parties agree has value and constitutes a type of payment. It’s a unit of exchange. When they taught real economics you would learn this. If I hold a dollar bill out to you, you see that as valuable because you can use it to buy things. We agree it’s money, so it is. Each dollar bill has a serial number on it, so according to the Treasury Department, that serial number represents legal tender in the amount of a dollar.

Well, in the case of cryptocurrency, a series of numbers—a sort of cryptography—represents an agreed-upon value. That series of numbers is currency, and it’s used to conduct transactions online. And like money, which the U.S. Treasury only produces a finite (albeit inflated) amount of, there is supposedly a finite amount of cryptocurrency. Promoters claim it is a finite amount but there is no intermediary—say the U.S. Treasury or a bank—to authenticate the value associated with that number. So in cyberspace it has value, but elsewhere, it’s a toss-up. You can’t go buy ice cream with it. Its price volatility is very high, making it unreliable. And it’s not a thing you can see or touch. It’s ideal for criminals.

The biggest and most well-known type of cryptocurrency is Bitcoin, though there’s no stopping anyone from creating their own cryptocurrency. In recent years, there are more than 1,500 of them, with more on the way. Because cryptocurrency is just a series of numbers, and because numbers, despite all claims, can be infinite, there’s no shortage.

Without certainty, but subject to animal spirits, the corresponding demand and value go up and down. Certainty arises when the two parties using it to buy and sell things agree on its value. So investment in Bitcoins or any other cryptocurrency is speculative at best. It only has value if people continue to want it and see it as valuable. The jury is still out. For all those who believe in crypto, that is fine. Go ahead and take down the Fed. But, for the rest of us, keep your guard up!

Bitcoin isn’t a scam—whether it has value or is useful is for you to decide. But what is a scam is when some fraudster throws out a lot of technical jargon and makes cryptocurrency sound like some unconquerable wave of the future. They claim they have some special insight to forecast a huge rise in cybercurrency, that it will eventually be the currency. In other words, for all its futurity, it is just another age old big pump-and-dump scheme. In December 2017, that’s what happened. Scammers intentionally pumped the value of Bitcoin so they could solicit investors, inflate the price up, then unload the ‘coins’ at a much higher value.

And many small investors fell for it, dumping all their money into it. Dipping a toe in is one thing, but pouring all your money into one investment is rarely a good idea—even a commodity you can actually see and use and has value. More on this subject in the book, Scam-Proof Your Assets.

In early 2017, Bitcoin’s prices went from under $1,000 to nearly $20,000 by the end of that same year. But then the market fell 80 percent, devastating investors who lost millions.

That hasn’t stopped scammers from plaguing Facebook with Bitcoin ads promising riches to savvy investors. In January 2018, Facebook instituted a policy banning Bitcoin and other cryptocurrency ads, but then later it relaxed those rules, allowing pre-approved advertisers to use its platform for these purposes, priming the pump yet again for a surge in cryptocurrency.

It bears repeating: Bitcoin and similar currencies have little, if any, actual intrinsic value, making it a prime target for crime. In fact, William H. Harris, Jr., founder of Personal Capital Corporation, a digital wealth management firm, reports that about 90 percent of all remote hacking is focused on Bitcoin theft by taking control of computers to mine their coins.

In 2019, a Ukrainian firm scammed $70 million from elderly investors in Britain, Australia and New Zealand. The company’s online ads featured interviews with celebrities such as Hugh Jackman and Gordon Ramsey who supposedly made a killing in crypto. High pressure salesmen in Kiev promised extraordinary returns. And the money all went down a Ukrainian rabbit hole.

“In what rational universe,” Harris writes, “could someone simply issue electronic scrip—or just announce that they intend to—and create, out of the blue, billions of dollars of value? It makes no sense.”

As Keller points out, “I get the idea that some of these ‘Bitcoin funds’ actually own no, or very few, Bitcoins, but are simply the next wave of Ponzi schemes. It’s actually a Ponzi schemer’s dream: Something that most folks don’t understand, but are being led by media buzz to believe it is the next big thing … Note to file: Nothing that you don’t understand is likely to ever turn out well.”

Scam-Proof Your Assets covers the many threats we face from cyber criminals. Everyone needs a guide book against deception.

Scam-Proof Your Assets

Are Reverse Mortgages a Scam?

Scam-Proof Your Assets: Guarding Against Widespread Deception comes out in October. It is my newest Rich Dad Advisor book in several years. It covers the very important issue of cyber criminality now harming all of us. The monetary losses are staggering. The emotional damage is disturbing. Email, internet and telephone scams take our assets. You must be vigilant at all times.

Scam-Proof Your Assets also argues that the government must take greater action to end this crime wave. You can help. Buy the book from by clicking below.

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I’ve covered so many scams I couldn’t fit all of them into Scam-Proof Your Assets. So the following is an excerpt that didn’t make the book, but is important for you to know.

Home Equity Conversion Mortgage Scam

First, a home equity conversion mortgage is an actual, legitimate type of mortgage, one type of what’s known as a reverse mortgage, and some say they can be helpful for seniors. Whereas in a typical mortgage, you take out a bank loan and slowly make payments until you’ve paid it off, a reverse mortgage, like its name suggests, works in reverse: The bank pays you all the money for the house—in a lump sum, in monthly payments, or through a line of credit—so your debt grows rather than decreases. You can’t really pay the loan back until you sell the house, with anything that might be left over going to heirs. Reverse mortgages are often promoted to seniors as a way for them to afford life in their later years. Family members left behind can then sell the home once the elderly owner has passed away and pay off the debt.

According to HUD, HECMs are the most common type of reverse mortgage, and it’s the only type that’s insured by the Federal Housing Administration. In this scenario, the homeowner is able to take advantage of equity earned in a home. The maximum loan amount of about $680,000 is available to a homeowner aged 62 or older who lives in it as the primary residence. The homeowner must have paid off the home or at least paid a significant portion of it. Terms are available at fixed or adjustable rates for a period of time that may be selected by the homeowner. The reason it’s endorsed by the government is that the homeowner doesn’t have to start paying on the loan until he or she is no longer living in it as a primary residence. Also, the loan involves FHA mortgage insurance that guarantees the owner or the heirs won’t have to pay more than the value of the home, even if that amount is lower than the loan amount.

But it’s definitely not a low-risk mortgage, which is why anyone considering a reverse mortgage of any sort has to go through mortgage counseling. It’s not a decision to make on the spur of the moment during a time of financial hardship. But scam artists and unscrupulous mortgage and financial insiders know that HECM’s are legitimized by the U.S. government, and they take advantage of this fact to con seniors who are concerned about making ends meet without a salary. This is a particularly easy sell because the terms of reverse mortgages are hazy at best to most people, so it’s easy for con artists to gloss over the important details.

Even though they may not blatantly be attempting to steal money, business people hungry to sell reverse mortgage products may use high-pressure sales tactics to sell the product to homeowners who aren’t a good fit for it. The Wall Street Journal actually says that the majority of these scams are perpetrated by people the victims know, such as financial advisors.

Reverse mortgage scams include the following:

  • The fraudster may take out an HECM without the homeowner’s knowledge in order to obtain the loan for the value of a home that the homeowner is now responsible for paying. Often this is done by relatives of seniors who are preying on their neediness and abusing their personal connections. They may take the monthly payments and keep some or all of it themselves rather than give it to the homeowner.
  • Obviously, those taking out lump-sum loans are at greater risk of scams. Some scammers find out who is opting for a cash-out reverse mortgage, in which the total value of the loan is taken as a lump sum, then fraudulently take the money or transfer it to a personal account. This can be done by an insider—for instance, a mortgage broker or relative, who endorses the check and puts it in his or her own account. Then the person may explain that the borrower has to go through this person to receive the money. The scammer only distributes a portion of the full amount and keeps the rest for him or herself. In one Michigan case detailed in a report by the Consumer Financial Protection Bureau, a loan officer directed the closing agent to write two checks: One to himself for over $42,000, and one to the actual borrower, for just over $61,000. In the end, the borrower was left with a balance of more than $131,000—nowhere near the amount received.
  • Some scammers convince reverse mortgage recipients to invest those loan dollars into shady schemes, promising they’ll double their money and preying on their desire for financial security or wish to leave money to their heirs.
  • Some crooked loan salesmen may offer reverse mortgages as “free income,” when in fact a mortgage isn’t income, it’s a loan payment, which is why it’s not taxed. This type of pitch cleverly hides the associated fees as well as many of the terms of the loan, such as the fact that the homeowner still must keep up the property and pay the property taxes each year. Other tactics suggest taking reverse mortgages as a way to delay Social Security benefits until 70, despite the fact that the CFPB found that the costs of doing so always exceed the cumulative savings created by delaying retirement benefits. Or they may create straw buyers in order to purchase distressed properties, convincing unwitting seniors to “purchase” the low-cost properties by taking over the deed without exchanging any money. Then, in this too-good-to-be-true scenario, the homeowner is convinced to take a cash-out reverse mortgage based on inflated appraisals, and the scammer makes off with the loan amount.

Reverse mortgages are a calculated risk that should involve insights from numerous professionals. Be sure, before considering any such option, that you speak with a certified HUD housing counselor and consult Better Business Bureau reports regarding any mortgage broker or lender. Of course, don’t believe anyone who claims to be able to offer you a home—or money for your home—with no strings attached. There are always strings, and they may be really pricey ones.

Scam-Proof You Assets: Guarding Against Widespread Deception covers the threats we all face from cyber criminals. It can be found on Amazon.

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How to Avoid Being a Victim of Rental Scams

If you own a rental property, are scammers misusing your assets?  If you are trying to rent, are you aware of the latest scams?  

According to data reported by Forbes in July 2018, U.S. renters lost a staggering $5.2 million to rental scams. And an Apartment List study reveals that 43.1 percent of American renters—nearly half—have encountered or fallen victim to rental scams. Though its victims range in age and characteristics, the Apartment List study found that victims are 42 percent more likely to be between the ages of 18 and 29—a population that tends to be inexperienced, in need of affordable short-term rentals, and with less household income to start with. This is a demographic that might need to rely on renting a place sight unseen, especially in the case of students from out of state or starting internships in strange cities. The below-market rental listing is likely to appeal to this group. As well, although Millennials are tech-savvy, they tend to be surprisingly trusting when it comes to scams, and they’re not likely to perform much due diligence in securing a rental.

Apartment List says the following are the standard rental scams that it found in its study:

Bait and Switch

Sure, there’s a property for rent, but it’s not the impressive one advertised. The scammer collects a deposit and a signature on a lease, but once the renter signs, he or she is stuck with whatever overpriced hovel the landlord actually provides the keys to. But even that is preferable to the alternative—at least there’s a place to live, unlike …

Phantom Rentals

Like the vacation rental scam, this one banks on a poor schmuck who needs a place to live. The scammer creates a fake listing for a place that doesn’t exist, isn’t actually a rental, or that he/she doesn’t own. The relatively low rent lures renters, who wind up with nothing to show for their money. 

Hijacked Ads

A scammer gets hold of a listing for an actual property for sale or rent, tinkers with the ad, then reposts it on another site with his or her own contact information. 

Missing Amenities

The Apartment List study found that laundry, heat, and air conditioning are the amenities most lied about in rental listings. Others include outdoor spaces (such as balconies), dishwashers, gyms, and pools. In a missing-amenity scam, the landlord dolls up the listing online by claiming it has amenities like these and others, which it doesn’t have, in order to justify a higher rent. Similar to a bait and switch, the renter doesn’t discover what’s lacking until he or she has already signed the lease and paid the deposit. (“A gym? No, no, I said Jim. My name is Jim. Sorry about that. Here’s your key.”)  

Already Leased

It’s already leased, but a scammer or a crooked landlord doesn’t care—he’ll keep right on advertising the property, collecting application and security and deposit fees all day. 

A Real-Life Rental Scam

In a variation on this theme, some scammers “rent out” properties that are temporarily sitting empty—a crime that involves two victims, the homeowner and the innocent person who just needs a place to rent. The scammer scours neighborhoods looking for homes with no occupants, such as those that operate as second homes or those sitting empty between renters. They may even go so far as to change the locks or steal spare keys the owners may have “hidden” nearby. Once they’re in, they might just stay there. 

Sixty-nine-year-old Beverly McKinney of Central Indiana was on a fixed income. She went on Facebook to find a rental for herself and her two great-granddaughters. Using a page intended to connect homes with renters, she found a great three-bedroom home in Anderson, Indiana. She reached out to the landlord, who asked her to fill out a contract and send the $500 deposit via MoneyGram. Once that was sent, the woman told McKinney, she’d send the keys. But no keys ever came, because the property’s actual owner, Steve Wagner, had already rented the property and had no idea who McKinney was or what had happened to her $500. 

According to The Indy Channel, her local ABC affiliate, McKinney reported the incident to the police, whose investigation uncovered that the Facebook page—containing numerous grammatical errors, frequently pushes for more money, and has a suspicious friend total of one—had been taken down, and the MoneyGram had been picked up by a man at an area Walmart. Chances are slim that she’ll see that money again.

“I just don’t want anybody else to get burned,” McKinney said to the TV reporter who interviewed her for the story. “It’s terrible … I lost $500 and my dignity.”

The problem with rentals is that they can be tough to find, especially in a hot market, and often involve your need to move quickly. So before you jump headfirst into a sweetheart rental deal, take a few precautions:

  • Say it with me now: If it’s too good to be true… Trust your gut. You probably aren’t just getting really lucky with that low rent, world-class amenities, perfect location, and no-screening process. If your gut says something is off, listen.
  • Check for that listing on other sites to see if it’s corroborated elsewhere. Sometimes scammers hack a listing on one site and repost their own versions on other sites. Confirm that the contact information is the same in every instance. Sometimes they’re even found in multiple cities and at widely varying prices.
  • Don’t make decisions on the fly. Your landlord should be methodical about doing a lot of checking on you, and you should exercise the same discretion. Anyone who eagerly promises to get you in quickly and skip the background check isn’t operating honestly.
  • Never rent anything sight unseen. Never send money or share personal information unless you’ve met the person and visited the property. It’s also a good idea to take someone with you. Avoid anyone from out of state or overseas, as that’s usually a way to justify asking you to wire money to a foreign account.
  • Watch for listings without photos or addresses, and double-check addresses on Google Earth, or just drive by, to be sure it matches the listing in quality and appearance.
  • Avoid deposits that seem out of proportion or higher than normal, and never use cash, MoneyGrams, or wire transfers. That’s just asking for trouble. Use credit cards or checks only.
  • Some websites are more reputable than others when it comes to finding quality listings. Craigslist is often problematic and filled with false ads and bait-and-switch tactics. Stick with higher quality sites such as or
  • Use a professional. This means finding an agent to help you locate a quality rental, or working with a reputable property management company.

Landlords and potential tenants need to be aware of all miscreants inhabiting the internet.  Everyone must be cautious nowadays.