We have all heard about that one investment opportunity that sounds too good to pass up. In reality, 99.99% of the time, passing up the opportunity is exactly what you should do. Investment fraud draws billions of dollars from investors every year. Here is how to spot a phony investment opportunity.
How It Works
- You get an offer for a "once-in-a-lifetime" investment opportunity.
- There is always a catch - you have to act quickly or miss the amazing opportunity.
- The investment may pay-off at the beginning, giving you confidence to keep the investment.
What You Should Know
- A pitch that uses phrases including "incredible gains", "breakout stock pick", or "huge upside and almost no risk" suggests high risk and possible fraud, according to the U.S. Securities and Exchange Commission.
- The pressure to "act now" is a red flag. If the fraudster convinces you to engage before you have taken the time to research or consider the offer, they get your "investment" money.
- Early dividends in investment scams are a ploy to make the investment appear legitimate. Often the money you receive is the scammer paying "existing" investors with money from new "investors".
- Scammers often target older adults, believing they are more trusting or have more available assets - but anyone can be a target.
What You Should Do
- Be proactive. If you are interested in investing, always do your research, rather than reacting to a pitch from an ad, a phone call or other source.
- Investigate investment opportunities by learning as much as possible about the offering (whether stock in a company, gold coins, real estate or any other investment). The SEC and FINRA offers databases to research the company's or the broker's legitimacy.
You have the power to protect yourself from scams. Please share these tips with friends and family.