Avoiding Scams

Welcome to Scam School

This page is your one-stop shop for understanding how scams work, in particular trading-related scams. Learn the tricks before they’re used on you.

Probably the best place to start is with the FTC website: https://consumer.ftc.gov/articles/investment-scams

[The FTC (Federal Trade Commission) is the U.S. government agency that protects consumers from fraud, deceptive practices, and unfair business conduct.]

Please read the whole page and then come back. Pay particular attention to the section “Signs of an Investment Scam”. This is my favourite quote:

“Anyone who promises a secret method or proven system for making money with little time, effort, or risk is full of empty promises. Only scammers make these types of claims.”

Let’s connect this to the value equation by Alex Hormozi in his book $100M Offers. It is a framework that breaks down how people perceive value in an offer:

Value Equation by Alex Hormozi

So, to maximise value, we need to inflate the dream as much as possible and make it believable, quick and easy.

The Scammer’s Playbook

Scammers follow this blueprint:

  1. Use lies and/or false claims to “hack” your perception of value of whatever it is they want you to buy
  2. Once they presented you with the misleading outrageous offer, scammers use high-pressure sales tactics to get you to act fast (the longer you think, the less likely the scam is to work). The two most popular are:
    • “Limited Time Offer” or “Expiring Soon” ⟶ Creates a sense of urgency
    • “Only a Few Spots Left” ⟶ Triggers scarcity bias — people fear being left out
    • Ask ChatGPT for the complete list
  3. Use a variety of deceptive material: fake reviews, fake testimonials, fake performance results, false promises, false claims about competitors, censored chatrooms (anything critical or negative is quickly removed) to reinforce your decision and potentially upsell you on something else.

Enough with the theory, let’s see how scammers put all this into practice!

Case Studies in Action

Starting with one of the best recent examples of how false claims can be used in trading-related marketing material to lure people in: https://consumer.ftc.gov/consumer-alerts/2022/04/day-trading-earnings-werent-payday-warrior-trading-promised

Let’s examine the marketing promise that got them in trouble:

“According to the FTC’s complaint, Warrior Trading drew people in with a “free webinar” that promised to demonstrate “a quick and simple way to get your dream of day-trading success going.” Once the company had people on board, it convinced them to pay hundreds or thousands of dollars to be a part of its trading programs.”

Quick, simple, dream ⟶  BINGO !

Let’s keep going, I’ve selected a few videos on the topic that are worth watching:

*These examples are intended to illustrate how scammers operate and highlight common red flags. I’m not claiming that any individual mentioned is or was a scammer—but after reviewing the content, I trust you’ll be able to form your own informed opinion.

This guy has done a tremendous piece of work by exposing various tricks of the trade. Just 2 caveats:

  • ⚠️Online funded programs operate in a very suspicious way and have HUGE red flags. In my opinion, they encourage gambling and are a complete waste of time for any serious trader. (more on this below**)
  • Take his views on business and marketing with a pinch of salt, they are a bit naïve and utopian. I agree in principle that some persuasion tactics are borderline unethical and manipulative, but we live in the real world and this is how the real world works. They are merely tools and it’s legitimate to use them as long as a business does not mix in lies, false claims and deception.

**⚠️More on Online Funded Programs:

Please read this Reddit post and then watch 2 minutes of the below interview from 1:03:00:

They both articulate very eloquently and clearly some of the obvious issues with funded trader programs:

Hopefully you’ve already heard of Coffeezilla. He is one of the best scam-busting Youtube channels. His best videos are on pump and dump scams, but he also has a few on course-selling scams and some of the marketing tactics. Here is a small taster selection to get you started:

This guy was a guest on Coffeezilla, but also has videos of his own exposing more tricks of the trade, including advanced ones like SLAPP – Strategic Lawsuit Against Public Participation: a lawsuit filed not to win on legal merits, but to intimidate, silence, or burden critics with the cost and hassle of legal defense.

Video and audio quality are not great for this one, but the content is good:

Emotional Vulnerability: The Scammer’s Favourite Target

One final point worth noting—highlighted in the SLAPP example—is that scammers often target individuals with low disposable income or those experiencing some form of desperation, particularly financial. This pattern also appears in certain business scams and prosperity gospel churches.

In other cults or high-control groups, a common thread is that people are more susceptible to recruitment during periods of emotional vulnerability or major life transitions—such as the loss of a loved one, job loss, divorce, or similar upheavals.

So, more than education level or intelligence, the primary factors that make people vulnerable to scams or cult-like systems are often emotional distress, instability, or unmet needs—not a lack of intellect.

Congratulations on graduating Scam School! 🎉

You’re now equipped to evaluate any trading claim or ad with clarity and confidence.