Avoiding Investment Fraud
No doubt you've heard the phrase, "If it sounds too good to be true, it probably is (too good to be true)." Beyond that warning, there are specific things you can do to try to avoid investment fraud.
The Federal Trade Commission published the following consumer tips in July 1997:
"Every year, Americans lose more than a billion dollars to investments that
turn out to be fraudulent.
The Federal Trade Commission suggests that potential investors can avoid losing their money if
they could only recognize a phony sales pitch.
Here’s what to listen for:
A 'ground floor opportunity' for you to realize a better return on this investment than any
other you’re involved in.
Guarantees of big profits in a short time.
Claims that no risk is involved.
Lots of pressure to act now because the 'market is moving.'
In addition, the FTC advises potential investors to:
Invest in opportunities you know something about.
Be skeptical about unsolicited phone calls about investments, especially those from
out-of-state salespeople or companies you never heard of.
Get all the information you can about the company and verify the data. Before you
invest with any company, check the seller’s materials with someone whose financial advice you
trust.
Beware of testimonials. Fraudulent companies sometimes hire references to claim that the
firm’s investments brought them sudden wealth.
If in doubt, don’t invest. Before you invest, ask tough questions and get information from a
variety of sources."
Entire FTC Document
