Fraud Risk Assessment: Cash Star

Cash Star
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  • Cash Star
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  • Last modified: December 2, 2015
  • Legitimacy
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Cash Star (cash-star.com) was launched in July 2015 as an investment service. The company’s legitimacy has been evaluated based on the items listed below. Every individual item has been checked for the presence of obvious red flags or warning signals. If these are present, an explanation detailing what triggered them has been included. A detailed description of the reasons to evaluate each of the included items can be found below the table.

Persuasion
Total Flags: 14 (3 Warnings = 1 Flag)
Phantom Richesflag-icon"220% in 1 day"? Cash Star slams it in your face, adding that it's "risk-free" as well.
Scarcitythumb-up-iconN/A
Source Credibilitythumb-up-iconN/A
Social Proofflag-iconCash Star has a 5 percent commission referral program, intended to get users to convince friends and relatives to invest as well.
Reciprocitythumb-up-iconN/A
Products
Guaranteed Returnflag-iconThe investment is said to be "risk-free".
High Return / Low Riskflag-iconThe available investment plans start at an extremely unrealistic and unsustainable 20 percent per hour. It would be nice to see the value of your home increasing that fast, but sadly this isn't a reality. Real estate investment cannot produce these returns.
Overly Consistent, Positive Returnsflag-iconThe investment plans return a perfectly steady income percentage regardless of any external variable. The 2007 housing market crash has shown that real estate is far from immune to external variables.
External Risk Insurancethumb-up-iconN/A
Secretive or Complex Trading Strategyflag-iconCash Star makes money by investing in real estate, claiming this is "as risk-free as a bank deposit." After the 2007 housing market crash this isn't a very credible statement to say the least.
Service
Website Availablethumb-up-iconYes
Website Registration Detailsexclamation_warningRegistered July 21 2015, and is set to expire in 2016.
Website Designflag-iconCash Star is a typical lazy scam, with content originating from other sources with hardly any modification. The text of the terms and conditions, for example, can easily be found elsewhere on the web (on much older pages).
Grammar on Websiteexclamation_warningThe text written by the owner can easily be separated from the stolen content because sometimes it's nearly impossible to read. "Today, in much of cities the prices on real estate market are quite adequate; therefore, that is not to say that it overheated."?
Payments Optionsexclamation_warningMultiple, but all of them (e.g. Bitcoin, Payeer, OKPAY) leave the recipient with some anonymity.
Service Disruptions & Unbusinesslike Conductflag-iconThe (stolen) terms and conditions basically state that Cash Star is exempt from all regulations because each transaction is a private one, which makes zero sense because the investment plan is distributed to the public via the website and therefore cannot be classified as private.
Contact Informationflag-iconThe company has not listed its address or a telephone number.
Business
Verified Addressflag-iconInformation not provided; hidden behind Whois Privacy protection.
Verified Ownerflag-iconInformation not provided; hidden behind Whois Privacy protection.
Business Registrationflag-iconNot possible to verify
Financial Regulator Registrationflag-iconNot possible to verify
Independent Auditsexclamation_warningNone

Note that items with a warning instead of a flag indicate that these could occur at a legitimate company. For example, legitimate companies will normally try to persuade you into buying their products. Multiple warnings will, however, still trigger a flag. A description for the listed items is provided below. This list is meant to assist with identifying obvious scams, and therefore does not provide any guarantees that a company is truly legitimate.

Phantom Riches
The most common tactic used by fraudsters is called “phantom riches”. By dangling the prospect of wealth such as “big payoffs”, the scam artist tries to get you to stop thinking logically.

Scarcity
Using the fear of missing out, fraudsters create a false sense of urgency with statements such as “last chance” or “only so few available”. This causes people to agree hastily, before even having the opportunity to think about what they’re doing.

Source Credibility
Persuasion is more likely when the source presents itself as being credible, expert and trustworthy. Common tactics used by scammers to make themselves look legitimate include using fake websites or hacked emails and pretending to be someone they are not. Alternatively, sources can also be external with claims such as “Warren Buffet has already invested in this”.

Social Proof
Fraudsters take advantage of herd behavior by creating the illusion of consensus or social proof that the investment is legitimate with claims that “everybody is already doing it”, or referral programs in which members encourage their friends and associates to invest as well. This automatically triggers something in the head that says: “if everybody [or someone from the inner circle] wants it, it must be good”.

Reciprocity
A business is likely to receive far more of our trust when it provides a lot of free value, because of the rule of reciprocity which causes us to tend to feel obligated to return favors after people do favors for us

Guaranteed Return
All investments carry some degree of risk, so a guaranteed profit is a clear red flag.

High Return / Low Risk
Like a guaranteed return, a high return / low risk investment opportunity also defies the common risk-return relationship. The best advice is an old one: “if it sounds too good to be true, it probably is”.

Overly Consistent, Positive Returns
Cryptocurrency markets are among the most volatile markets, hence the performance of any related product or service is also expected to fluctuate.

External Risk Insurance
The fraudster may present some external risk insurance for the investment in order to add to its credibility. In reality, insurance is only seldom acquired and guarantees typically lack substance. Dummy companies are often used to act as the guarantor or insurer.

Secretive or Complex Trading Strategy
Even in the world of cryptocurrencies one should be skeptical about special competitive advantages without any proper disclosure, or when the information is incomprehensible or incomplete. Too often only the positive elements are accentuated.

Website Available
Considering the importance of  domains and websites in the internet age, there is almost no reason for a legit company not to have one.

Website Registration Details
Very few scam websites survive longer than one year, so domains are generally registered for just one year unless otherwise required for the specific domain. For the same reason, websites created less than one year ago should be considered suspicious.

Website Design
Amateurish, cluttered and disorganized websites can point to a scam as many scam sites use text and images from legit websites and other sources which may not work together very well.

Grammar on Website
Many scammers have limited English proficiency.

Payments Options
Even though cryptocurrency payment options are logical for a cryptocurrency company, it is also very convenient for scammers as the recipient essentially remains anonymous. The same goes for services such as Western Union and Moneygram. Hence a lack of alternative payment options should still be considered a warning signal.

Service Disruptions &  Unbusinesslike Conduct
Especially Ponzi scheme promotors will encourage participants to “roll over” their investment. These schemes are not very fond of investors cashing out, which may lead to difficulties receiving payments and a non-responsive or difficult to reach customer service.

Contact Information
Legitimate companies have very little reason not to list their contact information.

Business Verification
First, you should never hand your hard-earned money over without knowing where it is going. Second, you should do a background check to avoid handing it to a known scammer. Be weary of people without an online identity. Scammers will typically try to hide their identity or conceal their true identity to avoid being easily discovered. Especially investment services are normally subject to strict regulatory oversight, so a registration should not be hard to find.

Independent Audits
Audits certainly do not root out every instance of fraud, but auditors do have a responsibility to detect errors or fraud in the company’s financial statements.