Category Chapter_17

Oct 26 2024

Ascend Ecom: AI-Powered Fake Business Opportunity

The Federal Trade Commission  (FTC) has filed a lawsuit against an online business opportunity scheme that it alleges has falsely claimed its “cutting edge” AI-powered tools would help consumers quickly earn thousands of dollars a month in passive income by opening online storefronts. According to the complaint, the scheme has defrauded consumers of at least $25 million.

The scheme is run by William Basta and Kenneth Leung, and it has operated under a number of different names since 2021, including Ascend Ecom, Ascend Ecommerce, Ascend CapVentures, ACV Partners, ACV, Accelerated eCom Ventures, Ethix Capital by Ascend, and ACV Nexus.

According to the FTC’s complaint, the operators of the scheme charge consumers tens of thousands of dollars to start online stores on ecommerce platforms such as Amazon, Walmart, Etsy, and TikTok, while also requiring them to spend tens of thousands more on inventory. Ascend’s advertising content claimed the company was a leader in ecommerce, using proprietary software and artificial intelligence to maximize clients’ business success.

The complaint notes that, while Ascend promises consumers it will create stores producing five-figure monthly income by the second year, for nearly all consumers, the promised gains never materialize, and consumers are left with depleted bank accounts and hefty credit card bills. The complaint alleges that Ascend received numerous complaints from consumers, pressured consumers to modify or delete negative reviews of Ascend, frequently failed to honor their “guaranteed buyback,” and unlawfully threatened to withhold the supposed “guaranteed buyback” for those who left negative reviews of the company online.

As a result of the FTC’s complaint, a federal court issued an order temporarily halting the scheme and placing it under the control of a receiver. The FTC’s case against the scheme is ongoing and will be decided by a federal court.

The Commission vote authorizing the staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Central District of California.

For more information, go to:

FTC Announces Crackdown on Deceptive AI Claims and Schemes | Federal Trade Commission

Teaching Suggestions:

  • Create a list of factors to consider when investing in “passive” income business opportunities.
  • Ask students to make a list of alternative methods of investing in “passive” income businesses.
  • Have students recommend situations where it would be appropriate to invest in alternative investments.

Discussion Questions:

  1. Why did the Federal Trade Commission file a lawsuit against Ascent Ecom?
  2. Why do you think the corporate defendants use different names, such as, Ascend Capventures, ACV Nexus, Ethics Capital by Ascent, etc.?
  3. Does Ascend Ecom’s business opportunity seem genuine to you?  Explain your answer.
Sep 28 2024

Most Frequently Impersonated Companies

New data from the Federal Trade Commission shows that Best Buy/Geek Squad, Amazon, and PayPal are the companies people report scammers impersonate most often.

A newly released data spotlight shows that consumers in 2023 submitted 52,000 reports about scammers impersonating Best Buy or its Geek Squad tech support brand, followed by about 34,000 reports about scammers impersonating Amazon. PayPal was the third-most impersonated company with about 10,000 reports from consumers.

When it comes to the amount lost, though, consumers reported losing far more money to scammers impersonating Microsoft and Publishers Clearing House than any other companies. Consumers reported losing a total of $60 million to Microsoft impersonation scams and $49 million to Publishers Clearing House impersonation scams.

The FTC recently finalized its new rule on government and business impersonation, which gives the agency stronger tools to combat and deter scammers who impersonate government agencies and businesses, enabling the FTC to file federal court cases seeking to get money back to injured consumers and civil penalties against rule violators.

The spotlight also outlines the most common forms of payment people reported scammers used to steal money in 2023. Scammers requested a variety of payment methods, including cryptocurrency and bank transfers, which were the top methods used by investment scammers, according to the data spotlight. Other frequently reported payment methods included payment apps or services and gift cards. The top payment apps and services people reported paying with were PayPal, CashApp and Zelle, while the most reported gift cards were Apple and Target.

For More Information, click here.

New FTC Data Shed Light on Companies Most Frequently Impersonated by Federal mmission

Teaching Suggestions

  • Ask students if they or their friends have had any experience with scammers impersonating well-known companies. If so, what actions were taken to ward off the scammers?
  • Ask students to prepare a list of actions they might take if a scammer approaches them.

Discussion Questions

  1. Why are Best Buy or its Geek Squad, Amazon, and Pay Pal the most impersonated companies?
  2. What can local, state, and federal regulatory agencies do to protect consumers from these impersonators?
  3. What should you do if you are targeted by an impersonator/scammer?
Sep 14 2024

Government Impersonation Scammers

New Federal Trade Commission data reveals that government impersonation scammers are targeting consumers for payments in cash, with the amount of cash reported lost to these scams nearly doubling from 2022 to 2023.

The FTC data shows that consumers reported losing $76 million when paying cash to government impersonation scammers in 2023, up from $40 million in 2022, an increase of 90 percent. In just the first quarter of 2024, consumers have reported losing $20 million to government impersonation scams when paying with cash.

The median loss for consumers who reported paying cash to government impersonation scammers in the first three months of 2024 was $14,740 – far higher than for any other method of payment. Consumers have reported mailing cash as well as handing cash to drivers sent to collect the money.

Scammers frequently impersonate government agencies, from local police to federal agencies, and while details of the pitch may vary, a common element is that the consumer they are targeting needs to send or transfer money to address an urgent issue or serious problem. This news is usually accompanied with a combination of dire warnings or threats designed to put their target in a state of mind where the urgency of the moment bypasses any doubts they have.

The key fact is this: government agencies will never call, email, text, or message you on social media to ask for money or personal information, and they will never demand a payment. Only a scammer will do that.

The FTC recently put into effect a new rule that gives the agency stronger tools to combat and deter scammers who impersonate government agencies and businesses, enabling the FTC to file federal court cases seeking to get money back to injured consumers and civil penalties against rule violators.

Consumers who are targeted by a government impersonation scam should report it to the FTC at ReportFraud.ftc.gov. More data about government impersonation scams is available on the FTC’s data dashboards.

For more information, click here.

Teaching Suggestions

·         Ask students if someone they know has been scammed by government impersonation scammers. If so, what was their experience?

·         Ask students to prepare a list of actions they might take if a government impersonation scammer approaches them.

Discussion Questions

1.      What can governmental agencies do to stop these impersonators?

2.      Once apprehended, should the perpetrators be fined or sent to prison? Any other penalties?

3.      What should you do if you are targeted by a government impersonation scammer?

Mar 16 2024

14 DIGITAL ASSET RISKS TO REMEMBER

There is no such thing as a risk-free trade or investment. Generally, bigger expected returns come with a greater risk of loss. The more you understand the risks of your investment, the more effectively you can minimize their potential effects. Here are some common risks associated with digital assets:

1. Unsupervised trading. Over-the-counter cash-market trading platforms—where you can buy or sell digital assets for dollars—are not supervised by regulators like other exchanges, banks, or brokers.

 2. Inconsistent customer protections. Some virtual currency platforms may be missing critical system safeguards and customer protections, such as protection against hacks or segregating customer assets. Without adequate safeguards, you may lose some or all of your digital assets.

3. Commingled customer assets. Over-the-counter trading platforms are commonly custodians of your assets. When you trade, you trade against the platform and your funds are held and recorded by the platform on its centralized system—not the blockchain. In these situations, your assets may be mixed with other customers’ assets, or could be used by the platform for operational purposes. If the platform is hacked, goes bankrupt, or disappears, you may not be able to get your money back.

4. Most new projects fail. And, others could be frauds. Take time to research and understand the project, the technology, use-case, demand, competing projects, governance, who’s behind the effort, the developers’ track records, how your money will be used, and when or if you can get it back. Was the code audited by a reliable third party and security tested? Closely review white papers and other documents. If they don’t make sense, or don’t exist, walk away.

5. Hacker attacks. In a digital environment hacking is always a threat. Hackers generally seek out the greatest amount of money and the least resistance. Only keep funds you are ready to spend or trade in wallets connected to the internet. Keep the rest in a cold (offline) wallet.

6. Phishing attacks. If you receive an email or text about your trading account; a transaction; a new product, wallet, or service; or receive an urgent request to contact customer support, do not click any links, open attachments or use QR codes. Phishing attacks often pose as popular brands or companies and the links provided in the emails go to imposter sites that steal your account.

7. Lost or stolen private keys. Your private key is your digital signature. If it is lost or stolen you will no longer have access to your assets. You can recreate a private key, with your digital wallet’s seed phrase—a string of words that when encrypted create the private key. Never give your private key or seed phrase to anyone.

8. New and novel. Compared to other forms of investing, digital assets are relatively new. They don’t have long, historical track records, which makes it harder to predict how they will react in different market conditions.

9. High volatility. Many digital assets are difficult to value. Uncertainty, changes in sentiment, economic conditions, or even a social media comment, can send market values rising or falling sharply.

10. Liquidity risk. It may be hard to sell digital assets that aren’t commonly traded. Lightly traded assets are also easier to manipulate.

11. Run risk. Stablecoins are not insured, and may not actually be supported by all the stabilizing assets they claim. If stablecoin owners lose confidence and rush for the exits, the panic could lock out some customers and leave them with worthless coins. Runs on one stablecoin can also cause ripple effects in other coins or other parts of the digital economy.

12. Counterparty risk. Blockchain transactions were designed to be unchangeable. Once your digital asset is sent to another wallet you cannot get it back. This makes knowing exactly who is on the other side of a transaction critically important. There are no do-overs or charge-backs.

13. Watch out on social media. Most digital asset scams begin on social media or messaging apps. Never make digital asset payments to people you meet online. And don’t rely solely on tips or claims you see on social media platforms.

14. Data can be manipulated. Criminals can hack social media profiles or easily create new aliases. Fraudulent platforms can also control what you see on their websites or trading apps, and can manipulate you to trade or invest more.

For more information, click here.

Click to access DigitalAssetRisks.pdf

Teaching Suggestions:

  • Ask students if they or their families have invested in digital assets.  If so, what has been their experience?
  • Ask students to prepare a list of potential risks of investing in digital assets.

Discussion Questions:

  1. Why is important to work with trading platforms that are registered to do business in the United States and your individual state?
  2. What can digital assets investors do to mitigate hacker and phishing attacks?
Dec 9 2023

Avoid Cryptocurrency Scams

How much do you know about cryptocurrency? If your answer is “not much,” that’s exactly what crypto scammers want to hear. And that’s exactly who Celsius Network, LLC company targeted with its false and misleading claims, according to a lawsuit filed by the Federal Trade Commission (FTC).

According to the FTC, Celsius marketed and sold financial services using YouTube and Twitter, now X, to promote marketing videos that were full of false and misleading claims. For example, Celsius claimed its crypto platform was safer and more stable than a bank. (It wasn’t.) And it told people that depositing crypto onto its platform came with a “no risk” promise that they’d earn high interest on their deposits. (A lie.) Even worse, the FTC claims the company used people’s crypto deposits without permission to spend, trade, invest, or pay business expenses. When Celsius started running out of money, it blocked people’s account access, preventing them from withdrawing their crypto. Now, Celsius is in bankruptcy, and consumers are unlikely to get all their crypto back.

Here’s how to avoid a cryptocurrency-related scam:

  • Don’t trust people who make big promises or guarantees. Only scammers promise “no risk” and guarantee high returns.
  • Research the company or cryptocurrency platform. Search online for the company or crypto platform name, plus “review,” “scam,” or “complaint” to see what people say.
  • Know that cryptocurrency accounts are not backed by a government like traditional FDIC-backed bank accounts.If something happens to your crypto account or funds, the government may not have an obligation to step in and help get your money back.
  • Learn about cryptocurrency and scams. Scammers take advantage of people’s understanding (or not) of cryptocurrency and how it works. Visit ftc.gov/cryptocurrency to learn more.

Using a crypto platform that isn’t living up to its promises or guarantees? Tell the FTC at ReportFraud.ftc.gov.

For more information, click here.

Teaching Suggestions:

  • Ask students to create a list of factors to consider before investing in cryptocurrencies.
  • Have students prepare a short paper describing a portfolio of cryptocurrencies they might consider now or in the future.
  • Have students suggest exceptions to the disadvantages of investing in cryptocurrencies.

Discussion Questions:

  1. Are there any attractive aspects of investing in cryptocurrencies?
  2. What economic and other factors would be the main concerns when investing in cryptocurrencies?
  3. What actions can you take to avoid cryptocurrency scams?
Sep 30 2023

MUSEUM OF SAVING

With an increasing influence of finance, credit, and business on our lives, the Museum of Saving is an innovative, entertaining location. Families, adults, teens, and children are provided with a clear-and-simple approach to saving and investing for improved financial literacy. The museum’s mission is “to contribute to spreading financial education to help people make rational and informed decisions and act in ways to achieve the priorities of their lives.”

Through a combination of education and entertainment, the learning through play approach of the museum uses technology and interactivity to offer:

  • An introduction to economic history that includes the role of money, trade, loans, early banking activities, and major financial crises.
  • An overview of the most common financial instruments. 
  • Themed tours with audio-visual and interactive labs.
  • A multidisciplinary (economics, literature, cinema) view of famous people.
  • Gamification videos and apps to test and reward money management knowledge and skills.

While the Museum of Saving is based in Italy, you can access the exhibits online.

For additional information on the Museum of Saving, click here.

Virtual Tour:  

Teaching Suggestions

  • Have students talk to others to obtain advice on how to best learn about saving and investing.
  • Have students take a virtual tour of the Museum of Saving. What features do students consider to be most interesting and informative?

Discussion Questions 

  1. What actions do you recommend for a person to learn more about successful saving and investing?
  2. Describe factors a person might consider when evaluating different savings and investing alternatives.
Jan 7 2023

BUILDING WEALTH

A research study that surveyed over 10,000 millionaires resulted in the following findings to help guide others to achieve a comfortable financial security:

  • 79 percent of the respondents did not receive any inheritance; 80 percent were from families at or below a middle-class income level.
    Conclusion:Building wealth is within your control and doesn’t depend on being born into a rich family.
  • 33 percent never made more than $100,000 a year; 31 percent made around $100,000.
    Conclusion: Wise spending, saving, and investing are more important than your salary level.
  • 94 percent live on less than they make; 75 percent reported never having a credit card balance.  
    Conclusion: Stay out of debt and keep expenses below your income to build a financial foundation.
  • 75 percent of those in the study indicated consistent investing over a long period of time as the reason for their financial success; 80 percent invested in their company’s 401(k) plan; none said one individual stock investment was a big factor in their financial success. 
    Conclusion: You don’t need to find that one stock that will make you rich. Invest consistently in broad-market index funds over a long period of time.

88 percent of those who responded graduated from college, compared to 38 percent of the general population. And over half (52%) of the millionaires in the study earned a master’s or doctoral degree, compared to 13% of the general population. Almost two-thirds (62%) graduated from public state schools, while only 8 percent went to a prestigious private school.

Most of the 10,000 millionaires studied achieved their wealth through consistent investing, avoiding credit card debt, and smart spending, along with…no lottery tickets… no inheritances…no six-figure incomes…no lucky stock picks. 

Even when millionaires don’t have to worry about money anymore, they’re still careful about their spending. Over 80 percent reported using a grocery list in some format.

For additional information on building wealth, click here.

Teaching Suggestions

  • Have students talk to others to obtain information about actions they take to achieve long-term financial security.
  • Have students create an oral presentation or podcast that reports the findings of the study summarized in this article.

Discussion Questions 

  1. What actions do you believe to be most important for building wealth?
  2. Describe how you might communicate to others suggested actions for improved long-term financial security.
Dec 17 2022

Personal Finance Simulations for Budgeting and Investing

Question:  What is a Personal Finance simulation? 

Answer:  A Personal Finance simulation allows students to fine-tune their decisions when they encounter real-life scenarios while taking a Personal Finance course. 

The authors of Personal Finance, 14e and Focus on Personal Finance, 7e have partnered with StockTrak.com to provide students with an interactive learning experience before they leave the classroom.   

The simulation that accompanies the Kapoor Personal Finance texts includes two components–a personal budgeting simulation and an investing simulation.

The Budgeting Simulation

  • Students assume the role of a full-time employee or part-time employee living on their own.
  • Over a virtual 12-month period, students review their estimated income and expenses, create monthly budgets and savings goals, and try to build an emergency fund. Each month takes about 20 minutes to complete.
  • Each month students manage their checking, savings, and credit card accounts as they deal with life’s expected and unexpected events that affect their budget.  
  • Within the simulation, additional personal finance tutorials are available to make sure students are learning about budgeting, banking, credit, employment, taxes, insurance, and more.
  • A class ranking based on net worth, credit score, and quality of life keep the students fully engaged and professors informed of each student’s progress.

The Investing Simulation

  • Students receive a virtual $25,000 in a brokerage account.
  • They can research U.S. stocks, ETFs, bonds and mutual funds and create their own investment portfolio.
  • All investment trades are based on real-time market prices.
  • Within the simulation, interactive tutorials help students get started and provide additional information during the simulation.
  • Students can monitor their performance versus their classmates.  At the same time, professors can track each student’s progress.

And BEST of ALL, with the new partnership between Stock-Trak and McGraw Hill, classes using the Kapoor Personal Finance textbook get a 50% savings when students register for the simulation – only $9.99 per student instead of retail price of $19.99.

Teaching Suggestions

  • Visit StockTrak.com/kapoor to learn more about the Personal Finance Budgeting and Investing Simulation.  You can learn even more by watching a short video or accessing the Kapoor demo materials located toward the bottom of the above site. 
  • It’s easy to get started.  All you need to do is access the above site, register your classes for Spring 2023, and indicate the dates you want your student to have access to the Personal Finance Simulation.  The site will generate a unique link for you to give to your students.
Oct 8 2022

Cryptocurrency Investments Scams

Consumers reported losing over $1 billion to fraud involving cryptocurrencies from January 2021 through March 2022, according to a new analysis from the Federal Trade Commission. Fraud reports suggest cryptocurrency is quickly becoming the payment of choice for many scammers, with about one out of every four dollars reported lost to fraud paid in cryptocurrency.

People ages 20 to 49 were more than three times as likely as older age groups to have reported losing money to a cryptocurrency scam. Older age groups, however, reported losing more money when they did report a cryptocurrency-related scam.

Some of the red flags consumers should watch out to protect themselves from scammers`:

  • anyone who claims they can guarantee profits or big returns by investing in cryptocurrency;
  • people who require you to buy or pay in cryptocurrency; and
  • a love interest who wants to show you how to invest in cryptocurrency or to send them cryptocurrency.

The FTC’s latest Consumer Protection Data Spotlight finds that most of the cryptocurrency losses consumers reported involved bogus cryptocurrency investment opportunities, which totaled $575 million in reported losses since January 2021. These scams often falsely promise potential investors that they can earn huge returns by investing in their cryptocurrency schemes, but people report losing all the money they “invest.”

After cryptocurrency investment schemes, the next largest losses reported by consumers were on:

  • Romance Scams: These scams often involve a love interest who tries to entice someone into investing in what turns out to be a cryptocurrency scam.
  • Business and Government Impersonation Scams: Reports show these scammers often target consumers by claiming their money is at risk because of fraud or a government investigation and the only way to protect their cash is by converting it to cryptocurrency.

Reports suggest that cryptocurrency-related scams often begin on social media. Nearly half of consumers who reported a cryptocurrency related scam since 2021 said it started with an ad, post or message on a social media platform.

For more information, click here.

Teaching Suggestions

  • Ask students to make a list of the red flags consumers should watch out for to protect themselves from scammers.
  • Ask students if they, their families or friends have become victims of cryptocurrency fraud.  If so, what was the outcome?

Discussion Questions

  1. Why is cryptocurrency quickly becoming payment of choice for many scammers?
  2. Why do most cryptocurrency-related scams often begin on social media?
  3. What might be some reasons that people ages 20 to 49 were more than three times as likely as older age groups to have reported losing money to cryptocurrency scams?
Mar 26 2022

THE 33-33-33 PORTFOLIO

For decades, a 60/40 (60 percent stock, 40 percent bond) investment portfolio has been encouraged by financial advisors. However, we live in a new world, so in recent years a 33/33/33 allocation has been suggested, with investments divided equally among stocks, bonds, and alternatives. This shift in portfolio strategy is the result of unsustainable stock prices, looming inflation, and expected higher interest rates.  

The alternative investments include assets such as venture capital, real estate, private equity, private debt, commodities, and cryptocurrencies. These asset categories offer investors enhanced diversification, and have a low correlation with stocks to provide an inflation hedge. 

Real estate offers an opportunity for an improved yield for investors with a lower risk tolerance. Venture capital and private equity are suggested for investors comfortable with more risk.

Recent J.P. Morgan research revealed that an allocation of 30 percent of these alternatives can substantially increase annual returns, while strengthening portfolio stability and decreasing risk. However, these illiquid assets can’t be quickly sold, or liquidated, so careful cash-flow planning is also necessary.

Remember, every portfolio must be personalized to the needs of the individual based on liquidity need, risk tolerance, and the time horizon of financial goals.

For additional information on the 33/33/33 portfolio, go to the following articles.

Article #1

Article #2

Teaching Suggestions

  • Have students research alternative investments (venture capital, real estate, private equity, private debt, commodities, cryptocurrencies) to determine recent returns, risk, and suitability for their personal portfolio.
  • Have students create a visual proposal or video with a suggested investment portfolio for their current or future situation.

Discussion Questions 

  1. What factors should a person consider when planning an investment portfolio?
  2. Describe actions a person might take to determine if alternative investments are appropriate for their financial situation.