It's not scam proof but it's pretty safe with smaller money amounts. But your stated scenario is possible. That's why I never play above a couple hundred in leagues just to be safe. The higher amounts at stake the more trouble someone will go to scam you. As far as taxes, I don't get into high money leagues with LS so.... No you don't have to keep your balance on LS. You can take it out but they do charge you depending on how you want your money delivered. If you're talking about the league balance, then yes. That's how LS makes money is by accruing interest with your money during the season, as well as the fees. You can do all the research and vetting but if someone wants to scam you they will. I've been in leagues where nobody was outwardly scamming but the money shouldn't have gone to certain owners but they had more votes. The best deterrent is to keep the stakes low when you're playing with strangers.