If you do thorough research before choosing the financial professionals you work with and the products you invest in, chances are you can avoid becoming a victim of investment fraud. But even experienced investors can occasionally be taken in by persuasive scams. The Internet has made it especially easy for skilled con artists to mine investors’ personal information and target individuals based on their investing habits or their religious or cultural affiliations. Online bulletin boards, spam, chat groups, newsletters, and email enable fraudsters to spread false information cheaply and easily with little risk of detection.
Investment con artists make their living by convincing investors to put their money into high-risk, worthless, or even imaginary securities. They operate by winning over investors’ trust and feeding them misleading information. While investment fraud comes in many guises, here are some warning signs:
High-pressure sales tactics that encourage you to make decisions quickly or do business in ways that are out of the ordinary
Investment claims of high returns with limited or no risk or guaranteed returns
An investment opportunity that is presented to you as a time-sensitive tip based on information unavailable to the general public
Just because someone from your religious or ethnic community approaches you with an investment opportunity doesn’t necessarily mean it’s legitimate. Many con artists use religious and cultural affiliations to gain the trust of unsuspecting victims. Be sure to check out any investment with a trusted financial professional. You’ll want to check the background of the person or firm offering the product with your state securities regulator or FINRA.
You can’t spot a fraud by the quality of the presentation. Con artists are usually well dressed and use professional-sounding language. Their promotional materials are often slick and well designed to give their frauds the appearance of the real thing.
