Make no mistake about it, the internet is a gold mine but it can also be a death-trap. Can you make money online? The answer is of course; can you lose money online, the answer is also of course. Hence there’s a 50:50 chance that you either win or lose. My hope is that reading and participating in this blog helps increase your chances of making money rather than losing it.

It’s true that there are lots of hoaxes online and this is due to the virtual and highly volatile nature of the internet. Online, anyone can be someone else and do virtually anything, including committing a crime. However, once you really understand how the internet works you’ll realize that it’s not all bad but is also bursting with countless great opportunities. Internet newbies often jump at any carrot dangled before them all in the name of a golden online opportunity to make quick cash. While there are some of such schemes which are genuine, there also are lots which are hoaxes.

Let me give you a quick example of an internet hoax which is presently making the rounds:

About two weeks ago I stumbled on an online article that discussed a means of making quick bucks. This, according to it, involved the repeated inter-conversion of two e-currencies X and Y (these aren’t their real names). The article claimed that a certain website converts currency X to currency Y at a rate of $1X to $1.5Y. Now suppose you convert $50 of X. Based on the rates, it’s equal to $75 of Y. Then you reconvert Y to X and the rate this time is 1 of Y = 0.95 of X. Thus when you reconvert $75 of Y back to X you get = $71.2 of X.
Hence with an initial sum of $50 of X you can make $71.2 – $50 = $21.2 profit each time you inter-convert. The article then went on to encourage readers to do as many inter-conversions as possible.

The instance above is one of the numerous scams online and even as you read this people are falling victim to this. Whenever I come across such articles I look out for certain factors which I call ‘Red Flags’. The presences of these tell me that it’s a scam:

1. Credibility of the Parties involved:
Here, Parties refer to websites, people etc involved in making the scheme work. I check the websites involved in the scheme to see if they are credible sites with a proven track record. In the case of the scam above, the two e-currencies were very credible but the intermediate exchange website was very questionable.

2. Financial Input Demand
Usually, I see a red flag whenever the financial input demand of such a venture is too high. For instance, in the case above, the exchange site demanded a minimum currency exchange of $50. If they were truly genuine they would have asked for less or better still, state their transaction charges.

3. Demand for Personal Data
This is a major red flag. Any website that begins to demand in-depth personal information from you, such as credit card details, social security number etc, is likely not reputable, please don’t divulge such information. Doing so makes you a prime candidate identity theft and with your identity a hacker can pretty much do anything online in your name. In the case above the exchange website had a ‘contact us’ page that demanded too much personal information before your compliant is received.

4. Ease
No matter how wonderful it sounds, there’s got to be some work done, no matter how small. This is also a major red flag. Any scheme that just requires you to pay money and then totally go to sleep while they do all the work for you is likely a hoax. In the case above, I knew there was no way such ridiculous rates could exist and lots of people won’t be aware of it. It was just too easy.

5. Clear cut Understanding of How it Works
I always think critically about how any scheme I come across works. This must be pretty clear to me before I even consider trying it out. All genuine schemes are often able to explain how they work to their prospective subscribers but fake schemes aren’t able to do so. In the case above the following weren’t quite clear to me, about how it the scheme works like:

a) How come the website exchanges far above the rates of other exchange sites (there’s is 1 of X to 0.95 of Y?
b) Are they not in business to make profit? If they are, how are they able to maintain such high rates without having gotten bankrupt by now?

6. Legality
I make it a priority to check the legality of any scheme I’m considering investing in. In the case of the exchange above, I read a lot of material on forex trading etc and basically didn’t find anything wrong with it (at least to the extent of my research) However, it ain’t a crime because you hardly ever find an exchange rate that is uniquely higher than the prevalent market exchange rate adopted by the majority of exchangers.