Most scams have at least one of these common red flags that are easy to spot:
GUARANTEED HIGH RETURNS – NO RISK!
There is no such thing! All investing involves some level of risk, and usually, the higher the returns, the higher the risk. Do your homework – protect your money and research each investment opportunity before buying.
OFFSHORE INVESTMENT – TAX FREE!
You can defer paying taxes, but you can’t avoid them. This type of deal is often pitched as a secret. By asking you to keep the deal to yourself, scam artists know you won’t have to answer hard questions from family, friends or financial advisers who might see through the scam. If you are persuaded to send your money overseas, it may be difficult, if not impossible to get back if something goes wrong.
GREAT INVESTMENT OPPORTUNITY – YOUR FRIENDS CAN’T BE WRONG!
Many investment fraud victims are introduced to the scam by family, friends or co-workers. Scam artists target religious, ethnic, or close-knit groups by working their way into organizations and befriending members in order to rip them off. This is often referred to as “affinity fraud”. This approach abuses our instincts to trust the people who are like us and the fear of missing out on a great opportunity. Always check out any individual or company offering you an investment opportunity.
INSIDER TIPS – PROFIT LIKE THE EXPERTS!
These scams are pitched as opportunities known only to a select few who are said to be making a lot of money. You might be invited to a seminar where salespeople use high pressure sales tactics or make misleading claims about a secret or exclusive technique for building wealth. Make sure you understand exactly what is being offered, find out if there has been any disciplinary action or enforcement action taken against the company and/or individual, and if they are registered with your local securities regulator.
DON’T MISS THIS OPPORTUNITY – GET IN NOW!
Scam artists use this tactic to pressure you into making a quick decision and try to exploit your fear of missing out on a valuable opportunity. Take the time you need to research any investment opportunity and get independent third-party advice.