The phone rings and a well-spoken gentleman asks if you have a moment to discover how to make a guaranteed 30% annual ROI on your money by investing in a new cutting edge technology. This is nothing new for you, as you except several investment calls a week. Although a guarantee of 30% return on your capital is awfully attractive. Don’t make investment decisions based upon phone calls alone.
This is the time to remember DON’T BE GREEDY. Conmen depend on hitting your “greed button” because once someone is thinking in that mindset they are blind to their usual logic.
If it sounds too good to be true; it typically is.
(Don’t make investment decisions based upon phone calls alone)
Investment fraud is nothing new. One notorious example was in the early 1920s, a con artist named Charles Ponzi fleeced American investors by promising lavish returns from a strange scheme to speculate in international coupons used by people in different countries to send each other return postage. In reality, Ponzi was using new investors’ money to pay off existing investors.
It’s a trick that criminals still engage. But in today’s world, they have more powerful ways to reach average people (robocalls, email, TV, social media) and convince them to hand over their money.
Don’t make investment decisions based upon phone calls A 2017 study sponsored by AARP’s Fraud Watch Network found that 31 percent of fraud victims made investments in response to phone calls, email solicitations, or TV advertisements, nearly triple the rate for investors in general.
Investment Red Flags to Lookout for:
- A caller who pressures you to send money right away to take advantage of a supposedly once-in-a-lifetime opportunity.
- A caller who uses phrases such as “huge upside and no risk!” The U.S. Securities and Exchange Commission (SEC) says such claims suggest high risk and possible fraud.
- Recommendations of foreign or “offshore” investments from someone you don’t already know and trust. Once your money is in another country, the SEC cautions, it’s more difficult to keep watch over it.
Do’s
- Do ask plenty of questions before you make any investment, including:
- Is the financial product registered with the SEC or state securities agencies?
- What are the fees?
- How does the investment company make money?
- What factors could affect the value of the investment?
- Do your homework. If you’re considering investing in a publicly-traded company, look up information about its finances and operations in the SEC’s EDGAR database.
- Know who’s handling your investment. Do a background search in BrokerCheck, an online database maintained by the Financial Industry Regulatory Authority (FINRA), a nongovernmental group that watches over securities firms and dealers.
- Be wary of free investment seminars, especially ones that include lunch. The SEC says scammers often figure that if they do you a small favor, you’ll feel obligated to invest.
- Do have an exit strategy. FINRA recommends rehearsing some stock lines to cut short a caller’s high-pressure pitch, such as, “I’m sorry, this does not fit my investment strategy. Thank you.”
Don’ts
- DON’T GET GREEDY. Conmen count on your hitting you “greed button,” blinding you to your usual logical reason.
- Don’t make investment decisions based upon TV commercials, phone calls or email solicitations.
- Don’t get dollar signs in your eyes. Con artists like to dangle the prospect of fabulous wealth to distract you from realizing the whole thing is a scam.
- Don’t jump on “inside” information posted to social media, chat rooms or forums promoting shares of a company that are certain to go up. It could be a “pump-and-dump” — a ploy to drive up the price artificially, enabling scammers to sell their shares for a big profit before the stock crashes and the remaining investors take a loss.
- Don’t believe someone claiming to represent FINRA who offers an investment guarantee — the organization says its officers and employees do not do this. Some particularly audacious scammers pose as FINRA executives to create a false sense of security about an investment and secure an advance fee.
- Don’t judge an investment opportunity by a company’s attractive, professional-looking website. These days, crooks can easily create a convincing online facade.
Trust Must be Built off of Verifiable Information
With that in mind, background checks can provide peace of mind. Many websites offer quick background checks, where they state that any information about a person is available. Unfortunately, this is misleading, as many “investigative” companies only skim the surface of a subject’s personal and business history. Frequently, unless an investigator combs through the information, things such as criminal convictions, civil judgments, and significant associations. Crucial details get excluded from these searches because of minor conflicts such as DOB or an alternative name spelling.
We understand that an accurate background check requires investigating deeper to reveal something that a subject has tried to conceal.
We prepare in-depth dossiers on individuals and their associates in potential deals. So the Investors can make informed decisions promptly based on verifiable data. Our investigations help mitigate risk, prevent fraud, and allow you to know who you are getting involved with.