I've been scammed, and I'm not afraid to admit it. I remember when our house in South Florida needed a new fence a few years ago. I soon found myself writing a $400 check to an unlicensed contractor for "supplies.'' He'd been endorsed by friends, and his rates were affordable. A few days later, he knocked on our front door, dropped off a truckload of lumber, dug a few holes and disappeared. (For related reading, see Homeowners, Beware These Scams!)

He had to go "up north'' for a family emergency and ours wasn't the only project he'd left undone. We never saw him again.

TUTORIAL: Investment Scams

Remember the last time someone pulled a fast one on you? "I should have seen that one coming,'' you said, kicking yourself. I certainly did after our experience with the fence guy. I was right, but as I outline in my new book, "Scammed: How to Save Money and Find Better Service in a World of Schemes, Swindles and Shady Deals," it doesn't have to be that way. You can fight back – and win.

The first step is to admit that you are scammable. One of my biggest annoyances with other consumer journalists, in fact, is that they pretend they're immune to the rip-offs in society – because they aren't. You are about to discover, neither am I.

Never Buy a TV from a Guy in the Street
During college, my friend Steve and I were unemployed, living with my grandmother in Southern California and eager to find jobs to cover our college tuition bills. As we pulled into the parking lot of a grocer one blazing hot Saturday afternoon, a man approached us and asked if we wanted to buy a color television. It was brand-spanking new, still in the box, and would cost us just $40. We bought it. When we opened the box at home, we discovered it was a broken TV that had been picked out of the dumpster. Scammed! I learned the oldest lesson in the book. If it looks too good to be true, it probably is.

Trust, but Verify
On its website, the bed-and-breakfast on Maryland's eastern shore looked ideal for a quiet country weekend. A wide-angle shot of its English garden and immaculate parlor displaying antique furniture and artwork, not to mention the proprietor's invitation to experience the small inn's "unique" hospitality, were all I needed to convince me to secure a nonrefundable reservation with my credit card. When my girlfriend and I arrived in town to check in, I parked just short of the property and soon realized that the neighborhood was iffy, at best. Dilapidated cars, some apparently abandoned, cluttered the street. The inn was a dump. We'd been duped. We phoned the proprietor and let him know we couldn't make it. He charged us for one night's lodging, which was another expensive lesson. Never make a purchasing decision based on a single source, let alone a source controlled by the company. That applies to brochures, a website or a flyer.

Multi-Level Marketing Equals Trouble
Just after graduating from college, I was invited to attend an "investment seminar" by an elderly affluent couple, who had been family friends for years. The pitch that evening was unlike anything I'd ever witnessed: The auditorium near the office park was packed with well-dressed, seemingly successful types. On stage, men in designer suits made polished presentations, in which they guaranteed us "automatic" six-figure incomes within weeks of signing. The fact that I could escape $3,000 lighter (that's $5,400 in today's money) was a miracle. This, my friends, was a cult of people pulling money from others. Within a few months, this multi-level marketing scheme had collapsed and I lost everything. There are no shortcuts to fortune.

The Bottom Line
I'm embarrassed that I fell for these obvious scams, but I'm also grateful. These rip-offs helped me avoid other, potentially bigger, scams later in life and I hope they will do the same for you.

Christopher Elliott is a consumer advocate who blogs about getting better customer service at On Your Side. Connect with him on Twitter and Facebook or send him your questions at by email.

Related Articles
  1. Professionals

    10 Must Watch Documentaries For Finance Professionals

    Find out about some of the best documentaries that finance professionals can watch to gain a better understanding of their industry.
  2. Stock Analysis

    Social Media Networks That Are Cashing in on the 2016 Presidential Election

    Learn how social media continues to shape the way political campaigns are run. Through social networks, candidates can reach voters directly like never before.
  3. Investing News

    Thursday Intel: Will Q4 Offer a Fresh Start?

    Investor hopes for a fresh start to the world economy in this quarter may be misplaced.
  4. Investing News

    This is the Fastest-Growing Consumer Complaint

    There’s no way to guarantee that your Social Security number won’t fall into the wrong hands. Here are some ways to make yourself less of a target.
  5. Professionals

    Prevent Employees From Hacking You Computer System

    Cyber security attacks from a current or ex-employee can cause a lot of pain. Here is how to avoid such attacks.
  6. Entrepreneurship

    5 Ways to Make Money on Twitter

    Find out how people are making money online on Twitter, and get some ideas that can turn Twitter into a source of revenue for you or for your small business.
  7. Savings

    Is It Safe to Send Money Through Facebook?

    Learn how Facebook employs strong measures to keep your information safe when sending money, but understand the rare threats that still exist.
  8. Investing

    How Shackling Offshore Banks Will Impact You

    FATCA regulations have cast a wide net on offshore banking activities, and many innocent account holders might get caught in its tangle.
  9. Professionals

    10 Must-Follow Broker-Dealers on Social Media

    Stay in the financial markets 'know' by following these influential independent broker-dealers on social media.
  10. Investing

    Dick Costolo Biography

    Dick Costolo is a very polarizing man – half the world credits him with saving Twitter Inc. (TWTR) from its own popularity and making initial investors rich while the other half blames him for ...
  1. What are some high-profile examples of wash trading schemes?

    In 2012, the Royal Bank of Canada (RBC) was accused of a complex wash trading scheme to profit from a Canadian tax provision, ... Read Full Answer >>
  2. How should a whistleblower report unlawful or unethical behavior?

    Whistleblowing takes many forms. A whistleblower could expose government corruption, expose unethical business behavior or ... Read Full Answer >>
  3. How do insurance companies use a whistleblower?

    Fraudulent claims are among the most prevalent and serious business risks that insurance companies face. Many consumers have ... Read Full Answer >>
  4. What are examples of inherent risk?

    Inherent risk is the risk imposed by complex transactions that require significant estimation in assessing the impact on ... Read Full Answer >>
  5. What is the difference between wash trading and insider trading?

    Wash trading is an illegal trading activity that artificially pumps up trading volume in a stock without the stock ever changing ... Read Full Answer >>
  6. What were the primary financial crimes involved in the ZZZZ Best case?

    ZZZZ Best was a company started by Barry Jay Minkow that claimed to be a carpet cleaning business. In fact, it was a Ponzi ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  2. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
  3. Normal Profit

    An economic condition occurring when the difference between a firm’s total revenue and total cost is equal to zero.
  4. Operating Cost

    Expenses associated with the maintenance and administration of a business on a day-to-day basis.
  5. Cost Of Funds

    The interest rate paid by financial institutions for the funds that they deploy in their business. The cost of funds is one ...
  6. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!