The Better Business Bureau urges consumers to use caution when investing their money. According to the U.S. Commodity Futures Trading Commission (CFTC), there is an increase in the number of deceptive offers that falsely promise high profits with low risks. Many of these offers target ethnic communities, using their languages.
The CFTC suggests that consumers carefully investigate any firm that offers to sell commodities or commodity futures or options and promises high profits, with no risks. They might be selling precious metals, such as silver or gold, or foreign currency, such as Euros, Yen or Deutschmarks. They also might be selling other commodities such as crude oil, heating oil, unleaded gas, or agricultural products such as corn, soybeans or cattle. The firm might offer to manage your money for you to trade in commodity futures or options, or to pool your money with other customers. If a firm offers any of these investments, and promises high profits and low risks, or claims that they have made profits for all of their customers, you should not believe them without proof. The commodities and futures markets are very risky, and you could lose your entire investment very quickly.
If you are solicited by a company to purchase commodities, the BBB and the CFTC suggest you:
- Stay away from opportunities that sound too good to be true. Be especially cautious if you have acquired a large sum of cash recently and are looking for a safe investment vehicle. In particular, retirees with access to their retirement funds may be attractive targets for fraudulent operators. Getting your money back once it is gone can be difficult or impossible.
- Avoid any company that predicts or guarantees large profits. Be extremely wary of companies that guarantee profits, or that tout extremely high performance. In many cases, those claims are false. Be sure you get all the information about the company and its track record and verify the data. If you can, before you invest with any company, check the company’s materials with someone whose financial advice you trust.
- Avoid companies that promise little or no financial risk. Be suspicious of companies that downplay risks or state that written risk disclosure statements are routine formalities imposed by the government. If in doubt, do not invest! If you cannot get solid information about the company and the investment, you may not want to risk your money.
- Be wary of high-pressure efforts to convince you to send or transfer cash immediately to the firm, via overnight shipping companies, the Internet, by mail or otherwise.
- Be skeptical about unsolicited phone calls about investments, especially those from out-of-state salespersons or companies you are not familiar with.
If you suspect fraud, contact the BBB (www.bbb.org), CFTC (www.cftc.gov) or your state’s Attorney General’s office. You can find out if a commodities broker is registered by calling the National Futures Association at 1.800.676.4632.