10. August 2010 09:54
“Looking for a way to grow your savings at a rapid rate? We’ve got just the answer! Our company has been providing our clients with a return rate that will beat the market any day. Invest with us and your nest egg will provide you with a comfortable retirement.”
This could be the basis for a pitch for any number of scams--scams that play off of people’s fears and greed to deplete their savings. Once people realize they have been victimized they may be embarrassed to tell others. But they should realize they are not alone.
The Washington Department of Financial Institutions just released a list of the top investor traps:
Green Schemes: You want to help the environment and possibly make a few bucks off the push for renewable energy sources. The scammers would like to make a few bucks as well. They have created schemes involving “clean” energy and the Gulf of Mexico clean up.
Promissory Notes, Deeds of Trust, Real Estate Investment Schemes: Legitimate companies use promissory notes to raise capital. Fraudulent ones appear to give the investor a higher rate of return and safety they seek but the paper is actually worthless.
Foreign Exchange Trading Schemes: Trading in foreign currencies usually requires more resources than the average investor has. So if it sounds too easy to get involved then something is wrong. Promoters make a profit by charging high commissions or selling investment strategies on trades. Trades may not be made at all and the return may be a part of a Ponzi scheme.
Oil and Gas Schemes: Fraudulent energy promoters have been offering oil and gas as investment alternatives. These tend to be highly risky investment and not for the traditional investor. There may also be high fees associated with this investment and any return could be consumed by the fraudsters.
“Off the Books” or Special Deals: You may be special, but be wary of any offering that is just for “special” customers or investors. There is a good chance that the deal is very risky, non-existent or illegal.
Affinity Fraud: Having something in common with another person is an easy way to connect and build a relationship. Con artists have found ways to either develop or leverage a common link to work their way into a group and then run a scam once they are in.
How do you protect yourself? Always, always do your homework. Do your own research so you can come to your own conclusions about what is right for you and your financial goals. Take a few minutes to become familiar with the types of fraud out there. Investments always carry a risk but conducting researching and being familiar with the signs of investment fraud will reduce your chances of losing your nest egg.
Want to learn more? Visit:
Washington Department of Financial Institutions
NASAA Investor Alerts& Tips and Investor Bill of Rights
Investor Protection Trust – Protect Yourself Videos