Last Updated on February 20, 2023
Israel is a fantastic country with amazing people. Unfortunately, a small group of highly effective scammers based in Israel continually give this country a black eye. A recent government report found internet fraud to be the most lucrative form of criminal activity in Israel and it’s only growing. As a country with a booming economy, Israelis have also been targeted by financial scammers from all over the world and this problem isn’t going away. In this article we will discuss tips and “red flags” for avoiding scams. We will also focus on recognizing manipulative sales tactics used in Israel and around the world.
Rules of thumb for avoiding scams
While these rules won’t protect you in every situation, they can help you avoid some of the most common ways in which scammers operate.
Never give any financial information on an unsolicited phone call
While the overwhelming majority of people despise getting calls from telemarketers, there are occasional situations where a reminder about an expiring policy or special sale could be helpful. The worst thing you can do is hand over credit card or other personal information to anyone you can’t verify is actually representing the company or organization they claim they are.
If you are genuinely interested in buying the product, service, or giving to the cause – thank the person for calling, hang up the phone, and go to the company or organization’s official website to find a phone number you can actually verify. The vast majority of successful fraud attempts are carried out by people claiming to represent businesses, organizations and government entities that you are familiar with. If you didn’t expect the call that should be considered an immediate red flag.
Never click on a link in an email or text if you’re not sure of the source
Scammers use phishing links to steal financial information, break into accounts ,and get paid by unsuspecting victims. One of the most popular scams here in Israel is someone pretending to work for the Israeli Postal Service or Customs Enforcement demanding you pay a customs fee to have your package released. A recent fraudster was able to steal hundreds of thousands of shekels this way before eventually being arrested. The sad fact is that any one can use a SMS marketing company to send a text message claiming to be someone they most certainly are not. If you can’t trust the source of the link you shouldn’t click on it.
Similarly, when it comes to email you should always verify that the sender and domain name match. If you’re getting an email which says it is from the IRS but is coming from an email with a domain like: [email protected] – you know right a way that its a scam! It is generally easy to identify what domain an email is coming from – gmail makes this very easy as pictured below. Immediate email red flags include: strange looking domains, spelling and grammar mistakes, spoofed URLs like amazonn.com instead of amazon.com , and generic greetings like “Dear valued customer”. When in doubt, don’t click.
Never transfer money to someone without confirming first
One of the oldest and most common financial scams involves a family member or friend who needs money urgently to get out of some bind “overseas”. Recent scammers are even capable of using AI to steal people’s voices directly from the voice notes on their phone. They can then clone that voice and make it sound like the message was actually recorded by that individual.
If any family member or friend can take the time to write you an email or send you a text asking for money, he/she can also get on the phone to confirm. Don’t ever send money to someone in a situation like this without speaking to them or someone who can confirm the story directly. Most likely, they will appreciate the heads up that their email account or phone has been hacked.
If it’s too good to be true, it isn’t true
No, you didn’t just win a million dollars in the Jamaican lottery, a Nigerian prince doesn’t want to send you a fat check and there is no lawyer out there just waiting to transfer you your inheritance from a long-lost relative. Any email, text, or phone call claiming you won anything should be viewed as immediate red flag and you should not follow any of the instructions for “claiming your prize.” Unfortunately, while so many of us have seen these scams many times, they are repeated in so many different versions because they work.
The same principle holds true for any company or individual promising you instant incredible returns or any “no-risk” high-reward investment. If such an investment existed they wouldn’t be selling it to you – they would be buying it all for themselves. Tragically, companies in Israel peddling fraudulent investments around the world were able to operate for years and steal billions before being shut down.
Never act immediately
Most scams will pressure you to act immediately, before you have time to think. Any email, text or phone call claiming or threatening that you must act within a certain amount of time should be viewed as a red flag.
Manipulative sales tactics
While scammers are clearly evil, there are many honest sales professionals. The goal of this article is not to lump all sales people in with scammers and that is certainly not my intention. That being said, I have definitely witnessed and heard about many manipulative sales practices that are worth discussing. There is a great deal of debate on which sales tactics should be considered manipulative or overly aggressive but it doesn’t really matter. No government body or regulatory agency will be able to protect you in every situation.
At the end of the day, the goal of many sales professionals is to get you to buy their product or service regardless of whether or not it is the best available option out there for you. They often do so by playing to behavior biases every one of us experience. The key to protecting yourself is recognizing the tactics being used so you can fully contextualize the advise you are being given and decide if the product or service is genuinely right for you. Recognizing your own biases can also make you a better investor. Here are some examples worth keeping in mind:
Confirming your beliefs
We love being proven right. This is called confirmation bias. We will always be more likely to accept information if it confirms a pre held belief. Sales professionals try to understand what you have already made up your mind about and fit the product or service to confirm that belief. For example: Let’s say you come to a financial advisor with the belief that dollar is going to keep going down against the shekel forever. The advisor is going to focus on how his investment strategy will protect you against the rising shekel and how he can do that so much better than those “other guys”.
If you instead come to that same meeting prepared to take the other side of whatever argument the advisor makes you are far more likely to get useful information and better evaluate how the professional can and can’t help you in your situation. You don’t have to be an expert on an issue to be a good devil’s advocate. There are two or more sides to every argument and even if you are strongly in favor of one side it is always beneficial to understand the basic beliefs of the other side. Keep in mind that ultimately your goal when seeking advice from any professional is to get the most comprehensive advice possible and the best understanding of all your options.
Leaving it to the experts
Many studies have shown how individuals outsource their critical thinking abilities when discussing an issue with an expert or authority figure. In some situations, our minds virtually “turn off” and we are far more likely to accept the advice we are being given without scrutinizing the advice properly. This is especially true in both the medical and financial fields where people have genuine fear about potential outcomes. Unfortunately, many “experts” take advantage of this fact to confidently sell you a product or service that may not be in your best interest. This isn’t to say that you know better than the expert you are getting advice from. But it is always in your best interest to keep your mind engaged and make sure you are asking all the important questions that are relevant to you.
Initial price setting
Anchoring bias is our tendency to give more weight to the information we receive early on in the decision making process. For example, a salesperson might hint at a price early on in the conversation and then give you a much lower price at the end. Since you will naturally compare the price you are being given now to the original much higher price that was “anchored” in your head from before you are far more likely to view the actual price as good deal. Always try and compare prices to similar products or services offered by different companies rather than comparing the price to other products or services offered by the same company.
Ignoring the long-term
Our brains are wired to focus much more on what happened recently than what happened historically – know as recency bias. This is the main reason investors and people selling investments products tend to focus on the short-term returns of specific investments. Choosing an investment that has had the highest recent returns is often one of the worst ways to predict the future returns of that investment. Looking at short-term returns to compare how an investment performed relative to the market may be useful but in about every other context it isn’t that useful on its own. Lower fees are often more predictive of future returns than recent performance.
Follow the money
Seeking advice from anyone who has a strong incentive to sell you a specific product or service has its risks. If a professional gets paid through commissions or referral bonuses they will always have a strong incentive to sell you that product regardless of your situation. They will also likely have a harder time fairly evaluating other options that they don’t earn a commision on. This isn’t to say their advice should be automatically discredited – but you should at least be able to put that advice in context. If they are not upfront or transparent about this conflict of interest while making a recommendation that should definitely be viewed as a huge red flag.
Avoiding the details
Sadly, there are many stories of Olim that bought a product or signed up for a service without really understanding many of the details. Often lack of confidence in Hebrew was a big part of the issue as they either didn’t fully understand what was written or weren’t comfortable asking all their questions. Spending the time to have someone you trust who can speak the same language review a contract, purchase agreement or service proposal can go a long way toward making a more confident and informed decision.
Best practices for resisting aggressive sales tactics
- Be your own devil’s advocate – always try to research differing points of view before meeting a professional. Make a list of questions that approach the topic from different angles to get the most comprehensive understanding possible.
- Avoid commissions and kickbacks – Whenever possible, avoid paying for advice from someone who is strongly incentivized to recommend a specific product or service.
- Sleep on it – Most sales people do not want you to walk out the door or sign off zoom without closing the deal first. Taking some time to think more about what you heard is almost always in your best interest.
- Get a second opinion – Don’t be afraid to get a second opinion before making a decision. Looking for a professional who seems to take an entirely different view on an issue then the original recommendation your received can go a long way in clarifying your own views on the issue.
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I help Olim make more confident decisions by sorting through the complexity around personal finance in Israel and delivering a well organized path forward.
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