Guarding Against Scammers

Fraudsters have mastered the art of presenting investment offers in the most seemingly innocuous ways. Knowing their techniques can help you keep your guard up and recognize a potential deception.

Here are the things to be on the lookout for:

  1. Tips from those you know. Some con artists are adept at exploiting an affiliation with a group, such as a church, community organization, or even family, to win an investors’ confidence while their guard is down. Affinity fraud is difficult to spot since the person offering the investment appears to be a member of your group. If you are approached this way, be sure to check for the warning signs of fraud and check with a person you trust before making any commitments.
  2. Advertising. Social media and digital communications in general have provided many more avenues for fraudsters to hawk their wares. It’s relatively simple to create an attractive website that appears totally professional and legitimate, but visual appeal is meaningless when to comes to selling investments.
  3. Free lunch or dinner offer. Invitations to seminars, often held at restaurants, are often ruses for marketing and selling high-cost, unsuitable investments.
  4. Unsolicited calls. A roomful of salespeople making unsolicited calls—called a “boiler room”—is one con technique that’s easy to avoid. Just use call screening and not answer these calls.  And if you do, you can just hang up.
  5. Junk mail. There’s an endless stream of investment offers that appear in your mailbox and your email account. Once you reach 50, it's very likely you will be inundated with investing-for-retirement seminars. Use a shredder or the delete key, whichever is appropriate.

Beware of Pundits

Be careful about taking advice of radio and TV personalities who are self-proclaimed investment experts promising a surefire path to wealth.

Some of these pundits base their advice on risky investments, are actually paid by the financial firms they recommend, or outright lie about their credentials and investment track record.

Sound investing isn’t a gimmick, game, or reality tv show. It’s best to tune out the noise that makes it hard to invest wisely.