Scammers and frauds have been around for ages. With the popularity of the Internet, fraudsters were gifted with even more opportunities to cheat people out of their hard-earned money. There are all sorts of scams in existence today. Some rely on social media while others still use phone calls and the U.S. Postal Service. Emails and texts are other ways that frauds cheap people out of their savings. In this post, we are going to look at some tips that can help you spot financial fraudsters.
Be Knowledgeable – Be Smart
Your first step down the road to enlightenment is reading about how to spot financial fraudsters! In all seriousness, the more information you arm yourself with, the better. When it comes to investment fraud, there are numerous red flags to watch for. You can better protect your loved ones and yourself by being well-informed.
Don't Feel Like You Have an Obligation
You are not obligated to invest just because a fraudster offers you "something for free". To try to get you to buy what they're selling, some salespeople will rely on guilt trips. “I gave you something for free, so won't you please invest?"
Never Feel like You Have To Rush
How many times have you heard this one, "This is an extremely limited offer. It's only good for the next 10 minutes. Hurry! Act now." Don't ever let anyone rush you into taking an investment opportunity. This is one of the red flags we referred to earlier. The offer will still be there tomorrow if it is a legitimate investment.
Don't Fall for the Line "Everybody's Doing It"
First of all, no, everyone is not. Fraudsters are just trying to convince you that they're offering you a sound investment by telling you that lots of people are getting in on it. Members of the same ethnic background, religious group, or social circle are frequently scammed through affinity frauds. Don't be one of them.
Don't Go Chasing Rainbows
This may also be referred to as "chasing phantom riches" by fraud-fighters. If spectacular profits or a specific, large return is promised in an investment pitch, be extremely skeptical. Chances are, you will never see the kind of return or profit they promise. Those types of guarantees can't be made by a salesperson. Risk is involved in every investment. That's part of the game!
Check out Credentials and Other Information
Any credentials that a fraudster supplies you with should be checked over and verified. The truly experienced fraudsters have learned how to reproduce just about any document. Everything can be faked, including emails, caller IDs, site addresses, etc.
A scammer will try to look as professional and successful as they possibly can. True investment professionals, however, must register with your state insurance regulator or state securities as well as the Securities Exchange Commission and/or the FINRA.
To get information on investment advisors and brokers, a free online tool can be found at FINRA BrokerCheck.
Current Types of Scams
Though there are many scams out there, here are just a handful of the most common scams taking place today:
- Employment and job scams
- Small business scams
- Online, credit card, and banking account scams
- Auction, classified, and online shopping scams
- Computer hacking
- Romance and dating scams
- Competition, sweepstakes, and lottery scams
- Advance fee fraud