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Monday
Mar262012

Outsmarting the Con Artists: Top 5 Ways to Avoid Scams

iStockphoto/Thinkstock(NEW YORK) -- Tom Arnold was a smooth talker.  In six years, he made $3 million in commissions selling supposedly rare and gold coins.  Arnold worked for a company called All American Coins, cold-calling potential investors and roping them in on the phone.

Arnold, who is awaiting sentencing on fraud charges, told former investigator Doug Shadel, "What you have to do is keep telling them that the coins went up no matter what's going on in the world.  Whether oil is doing good or oil is doing bad -- anything that is going on with the economy -- if there's a new president, the coins went up.  If it was snowing, the coins went up."

Shadel, who is now the Washington state director for AARP (formerly the American Association of Retired Persons), interviewed Arnold and other con men for a new book called Outsmarting the Scam Artists. How to Protect Yourself from the Most Clever Cons

Every con man has the same basic technique, Shadel told ABC News: "Their goal is to get you into a heightened emotional state."

Shadel says the scammers call it "the ether," a reference to the inhaled anesthetic sometimes used to knock out patients before surgery.  When con artists get you into the "ether," the rational mind goes out the window and the emotional mind takes over.

"If anyone spent five seconds thinking logically about any of these offers, they would never do it," he said.

So, Shadel warns, if someone is trying to pitch you on a deal, and your "heart is palpitating, you have sweat on your palms, you can't think of anything but this offer," you're in the "ether" and you need to slow down.

"I think the number one piece of advice," he says, "is never decide to buy something at the time you hear a sales pitch.  There's no deal out there that can't wait 24 hours."  Shadel says that allows you time to get out from under the "ether" and do due diligence.

So what should you do the next time a persuasive-sounding sales person calls you with a deal of a lifetime?  Shadel has five key pieces of advice to avoid being swindled:

-- First, as noted earlier, don't make financial decisions "under the either."

-- Second, learn to spot persuasion tactics.  Some of those used by con artists include promises that this deal will make you rich, and assurances that what you're about to buy is so scarce you have to purchase it up immediately.  Shadel says another common tactic is to promise there's a wealthy investor waiting in the wings to snap up your purchases at a big mark-up.

-- Next, Shadel advises, "Develop a refusal script."  He says many potential investors have trouble hanging up because they don't want to be rude to the salesman on the other end of the phone.  Memorize and practice a simple line to allow you to hang up quickly.

-- Fourth, before you buy, check to see if the company is registered with the state or federal governments.

-- Finally, beware if you're under financial stress at home or on the job.  You are more likely to jump at the chance to make a quick buck.

Copyright 2011 ABC News Copyright







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