Threats to Investors

These are some common ploys often used to cheat investors.

  1. Ponzi schemes. Using money from later investors to pay early ones until the scheme collapses is an old con that still finds new victims.

  2. Unlicensed individuals selling securities. Unlicensed sellers should be a red flag for investors.

  3. Unregistered investment products. Most legitimate investments must be registered with the state before they can be offered for sale to the public.

  4. Promissory notes. Notes marketed to the general public typically turn out to be scams. If the interest rate sounds too good to be true, it probably is.

  5. Senior citizen investment fraud. Con artists continue to target the savings of retirees with fraudulent schemes. Before investing check with state securities regulators for proper licenses and any complaints against the broker.

  6. High-yield investments. Risk-free, guaranteed high-yield instruments are usually none of these things.

  7. Internet fraud. A bad deal isnt any better because its offered on the Internet. Many online scams are new versions of old schemes.

  8. Affinity fraud. Con artists are using victims religious, ethnic or other affiliations to gain their trust and then steal their life savings.

  9. Variable annuity sales practices. This product isnt suitable for everyone, particularly seniors. Sales reps frequently fail to disclose high surrender charges and steep sales commissions.

  10. Oil and gas scams. With high oil prices and instability in the Middle East, regulators fear con artists may renew schemes promising investors easy profits on these commodities.

Source: North American Securities Administrators Association, Washington, D.C., .


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