Educational Consumer Tips
Better Business Bureau
Invest Wisely - Investment Opportunities
Many people will resolve to improve their financial security by taking advantage of investment opportunities. To steer clear of risky ventures, the Better Business Bureau is urging would-be investors to carefully evaluate the investment product or program, its promoters and its sales pitch.
To avoid falling victim to fraud, the BBB advised investors to be particularly cautious of any of the following red flags: * Words like "risk free," "guarantee," "high return," or "limited offer." According to government regulators, no financial investment is "risk free" and a high rate of return means greater risk. * Offshore scams and investment opportunities in other countries, particularly if they claim to be "tax-free" and "confidential." If you send your money abroad and something goes wrong, it will be particularly difficult to locate your money. * Promises of "quick" profits or "fast" cash, "ground floor" opportunities, offers to share "inside" information, and pressure to invest immediately because the "market is moving." * Spam emails that lure you with subject lines, such as "Hot Stock Tips". Before making an investment decision, get the facts in writing. Verify that the investment firm and seller are licensed and registered.
When looking to invest your hard-earned money, make sure to do your homework first. At times, scams are easier to spot; however, with the tools available to con artists nowadays, scams are becoming more and more sophisticated.
Spotting a potential scam
It is crucial to know what scams might look like in order to effectively avoid them. Having said that, here are a few red flags to be wary of:
-Pyramid schemes: This often happens when investment con-artists promise to turn your small investment into a significant profit in a short duration.
-Ponzi scams: This person will buy plenty of stock with the sole purpose of convincing others to do the same. Once they gather the interest of potential victims, they haul out, leaving numerous individuals with useless stock.
-Advance fees: These scammers will offer to take worthless stock out of your hands; however, before doing so, you’re asked to pay a fee.
-Scarcity tactic: In a situation such as this, con-artists will create a false sense of urgency to encourage you to purchase quickly.
-Bribing: Keep an eye out for individuals that offer a significant discount, rebate or even a cut of their commission if you purchase within a certain amount of time.
Now that we are somewhat aware of what investing scams might look like, here are a few tips to help avoid them:
-Do your research! Check out the seller and always ask questions. A legitimate professional will be licensed. Visit bbb.org to help determine whether or not a professional is registered.
-Be skeptical, if you ask questions and don’t feel comfortable, don’t commit. You may be able to prevent being taken advantage of.
-Always review your account statements. Pay close attention to fees and changes to your investment amounts.
-When making payments, always pay the company directly instead of the salesperson.
-Check with the U.S. Securities & Exchange Commission (www.sec.gov) and the Wisconsin Department of Financial Institutions (WDFI.org - Division of Securities at www.wdfi.org/fi/securities/).
BBB wants to help you invest with caution. If you have any questions or concerns, we invite you to visit https://www.bbb.org/smart-investing/