Investment frauds are unfortunately becoming more and more common. With the current state of the economy, many people are looking for ways to make a quick buck, and unscrupulous individuals are taking advantage of this very fact.
If you’re thinking about investing your hard-earned money, it’s important to be aware of the various types of investment frauds out there. William Schantz will now tell you some of the tell-tale signs of investment fraud.
How to Spot an Investment Fraud
Promises of High Return with Minimal Risk
According to William Schantz, you should always be wary of any investment that promises above-average returns with little or no risk. There is no such thing as a free lunch in the world of investing. Anytime someone guarantees you’ll make money without any risk, it’s likely a scam.
Unregistered Investments and Unlicensed Sellers
Federal and state securities laws require most investments and the people selling them to be registered with the SEC and/or your state securities regulator. You can check whether an investment is registered by using the SEC’s EDGAR database or by calling your state securities regulator. Whenever this happens, it’s a good idea to proceed with caution, as these investments may not be legitimate.
High-Pressure Sales Tactics
Investment fraudsters often use high-pressure sales tactics to get people to invest their money. They may try to rush you into making a decision by saying the deal is only good for a limited time or that there is a limited number of shares available. Don’t let anyone pressure you into investing your money before you’ve had a chance to do your research.
Requiring Upfront Payments
William Schantz recommends staying away from any investment that requires an upfront payment, especially if it’s a significant amount of money. Upfront payments are often used by fraudsters to make off with people’s money without actually investing it. If you’re asked to make an upfront payment, make sure you understand exactly where your money is going and how it will be used.
Lots of Technical Jargon
Complex products and strategies that are hard to understand. Be careful with investments that are sold using intricate jargon or overly technical explanations. If you can’t understand how an investment works, you may be at risk of losing your money.
Promises of Inside Information or “Secret” Tips
Investment scams often involve claims that the seller has special “inside” or “secret” information about a company or other investment. Be wary of anyone who tries to sell you on an investment based on seemingly secret information. Remember, if it were truly valuable, it wouldn’t be a secret.
Another tell-tale sign of investment fraud is unprofessional conduct of the salesperson. This can include things like making false or misleading statements, refusing to provide information about an investment, or engaging in illegal activity. If you’re dealing with someone who seems unprofessional, it’s best to steer clear.
Investment fraud can take many different forms so it’s important to be aware of the various signs. If you see any of the red flags mentioned above by William Schantz, do proceed with caution or avoid the investment altogether. Protecting your hard-earned money should be your top priority.