Quiz | December 2009
Is This a Scam?
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Criminals often use fads, news stories and economic tough times as hooks to rip off investors (see Watch Out for Scams Targeting Seniors). Here are eight, uh, let's call them "business opportunities." See if you can pick which are scams and which are actual investments.
Quiz
Is This a Scam?
iStockphoto
Question 1 of 8
For a minimum investment of about $25, you can buy into a venture that owns 1 million acres of land in Texas -- experts say the shares could triple in value.
A. Scam
B. Not a scam
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Quiz
Is This a Scam?
iStockphoto
Question 1 of 8
For a minimum investment of about $25, you can buy into a venture that owns 1 million acres of land in Texas -- experts say the shares could triple in value.
You're right! B. Not a scam is correct.
Sorry, wrong!
is incorrect.
The right answer is B. Not a scam.
The Texas Pacific Land Trust (symbol TPL) is one of the oldest, least-known and most unusual listings on the New York Stock Exchange. It started more than a century ago when the Texas & Pacific Railway Company went bankrupt and put 3 million acres of land into the hands of a trustee to manage and sell off when the price is right.
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Quiz
Is This a Scam?
iStockphoto
Question 2 of 8
You see an ad in a national newspaper for an investment opportunity in "prime bank" financial instruments issued by the world's top 50 banks. The ad claims the opportunity is "risk-free, guaranteed by the World Bank and trades in overseas markets" and will "generate monthly returns of 20 % to 200%."
A. Scam
B. Not a scam
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Quiz
Is This a Scam?
iStockphoto
Question 2 of 8
You see an ad in a national newspaper for an investment opportunity in "prime bank" financial instruments issued by the world's top 50 banks. The ad claims the opportunity is "risk-free, guaranteed by the World Bank and trades in overseas markets" and will "generate monthly returns of 20 % to 200%."
You're right! A. Scam is correct.
Sorry, wrong!
is incorrect.
The right answer is A. Scam.
Whenever you hear or read the term prime bank, watch out. Criminals use it to make their pitch sound legitimate. The pitches usually are vague and sometimes claim regulatory officials would deny knowledge of such financial instruments, according to the Securities and Exchange Commision. The reality is these financial instruments don't exist.
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Quiz
Is This a Scam?
iStockphoto
Question 3 of 8
Ever consider a career in worm farming? All you need is dirt, a starter kit and some worm stock to get started. For an investment of several thousand dollars to $50,000, you'll be able to sell your worm stock at $8 a pound or more.
A. Scam
B. Not a scam
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Quiz
Is This a Scam?
iStockphoto
Question 3 of 8
Ever consider a career in worm farming? All you need is dirt, a starter kit and some worm stock to get started. For an investment of several thousand dollars to $50,000, you'll be able to sell your worm stock at $8 a pound or more.
You're right! A. Scam is correct.
Sorry, wrong!
is incorrect.
The right answer is A. Scam.
In 2003 and 2004, several worm-farm scams slithered across the country, with many investors putting up to $50,000 in the scheme.
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Quiz
Is This a Scam?
iStockphoto
Question 4 of 8
Jojoba, a shrub native to deserts in Arizona, California and Mexico, yields beans with a wax that can be turned into a biofuel. Investment banks offered limited partnerships in jojoba acreage.
A. Scam
B. Not a scam
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Quiz
Is This a Scam?
iStockphoto
Question 4 of 8
Jojoba, a shrub native to deserts in Arizona, California and Mexico, yields beans with a wax that can be turned into a biofuel. Investment banks offered limited partnerships in jojoba acreage.
You're right! B. Not a scam is correct.
Sorry, wrong!
is incorrect.
The right answer is B. Not a scam.
The limited partnerships were sold in the 1980s, but changes in the tax law made them unattractive and ended the investment.
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Quiz
Is This a Scam?
iStockphoto
Question 5 of 8
You can invest in a company that's salvaging a half-billion dollars of sunken treasure from a shipwreck in the Atlantic off the coast of Europe.
A. Scam
B. Not a scam
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Quiz
Is This a Scam?
iStockphoto
Question 5 of 8
You can invest in a company that's salvaging a half-billion dollars of sunken treasure from a shipwreck in the Atlantic off the coast of Europe.
You're right! B. Not a scam is correct.
Sorry, wrong!
is incorrect.
The right answer is B. Not a scam.
The public treasure-hunting company, Odyssey Marine Exploration (OMEX), is salvaging such a wreck. Shares of the company, based in Tampa, currently trade for about $4. But be warned: Many treasure-hunting investments really are scams.
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Quiz
Is This a Scam?
iStockphoto
Question 6 of 8
Someone says that you can buy international reply coupons, the equivalent of a self-addressed stamped envelope for overseas mail, and make a bundle by trading them in for U.S. stamps.
A. Scam
B. Not a scam
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Quiz
Is This a Scam?
iStockphoto
Question 6 of 8
Someone says that you can buy international reply coupons, the equivalent of a self-addressed stamped envelope for overseas mail, and make a bundle by trading them in for U.S. stamps.
You're right! A. Scam is correct.
Sorry, wrong!
is incorrect.
The right answer is A. Scam.
In fact, this was the original scam that Carlo Ponzi, one of the greatest scam artists in history, began in 1919. Although the stamp scheme in fact wasn't profitable (Ponzi claimed investors would reap a 400% return), enough people believed it to invest with Ponzi. He then paid some of the invested money back to investors, who thought it was a moneymaking enterprise and encouraged more people to be duped. Such swindles are now referred to as Ponzi schemes.
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Quiz
Is This a Scam?
iStockphoto
Question 7 of 8
You get a call from someone claiming to be from the Federal Trade Commission. He says you've won the lottery or sweepstakes, but first you must pay federal income tax and insurance before you can receive your winnings.
A. Scam
B. Not a scam
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Quiz
Is This a Scam?
iStockphoto
Question 7 of 8
You get a call from someone claiming to be from the Federal Trade Commission. He says you've won the lottery or sweepstakes, but first you must pay federal income tax and insurance before you can receive your winnings.
You're right! A. Scam is correct.
Sorry, wrong!
is incorrect.
The right answer is A. Scam.
The crooks gain credibility by using Web technology to make it look as though they're calling from Washington, D.C., and "FTC" even shows up on their targets' caller IDs. The caller asks the "winner" to wire money or send a check for an amount between $1,000 and $10,000. Of course, there is no prize. FYI: Real sweepstakes don't require you to send money to claim a prize.
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Quiz
Is This a Scam?
iStockphoto
Question 8 of 8
One way to squeeze countries that sponsor terrorism is to not invest in companies that do business with them. Some funds guarantee their investments are free of any firm connected with Iran, Syria, Sudan or North Korea.
A. Scam
B. Not a scam
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Quiz
Is This a Scam?
iStockphoto
Question 8 of 8
One way to squeeze countries that sponsor terrorism is to not invest in companies that do business with them. Some funds guarantee their investments are free of any firm connected with Iran, Syria, Sudan or North Korea.
You're right! B. Not a scam is correct.
Sorry, wrong!
is incorrect.
The right answer is B. Not a scam.
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Quiz
Is This a Scam?
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