Be suspicious of individuals who ask you to give them remote access to your computers or mobile devices. It is a sign that you are being targeted for fraud. Fraudsters rely on the sad fact that many investors need to take the time to investigate before investing. Always research investment opportunities independently, using independent sources such as EDGAR and company news releases.
Ponzi Schemes
A Ponzi scheme is a dishonest investment program that makes inflated returns claims. These returns often seem unbelievable compared to other legitimate investments at the time, and they can play on people’s greed. Generally, these schemes are targeted at unsophisticated or inexperienced investors. They can also target victims with specific characteristics like age or ethnicity. Sometimes, Ponzi schemes start out as legitimate investment vehicles, such as hedge funds. However, they may degenerate into a Ponzi scheme if they lose money or fail to meet expectations. These investment vehicles often fabricate financial reports or even fake audits. It can accelerate a Ponzi-type scheme’s collapse once investors demand their money back. Consider hiring a New York investment fraud lawyer immediately if you are dealing with this scam. Your ability to start the rehabilitation process will increase as soon as you seek out.
If you want to protect yourself from falling prey to investment scams, it’s important to inform the authorities about any dubious activities you come across. In addition, you should consider seeking out national and state regulatory agencies for information on protecting yourself from investment fraud.
Pump-and-dump schemes
A pump-and-dump scheme involves promoting and selling a security that has not been issued or registered under the securities laws. This type of fraud is a classic example of investment manipulation and can be committed using email spam, false news reports, fake stock filings, and more. The FBI works closely with other agencies to protect consumers from this form of fraud.
In a typical pump-and-dump scheme, criminals promote a dormant stock by sending millions of emails to unwary consumers. These emails often contain inaccurate or misleading information and create a sense of urgency to buy the stock. When demand for the stock reaches a critical level, the criminals dump (sell) their shares to make a profit. It causes the stock price to drop, and unsuspecting investors are left with significant losses.
Investors should always be wary of supposedly high-yield investment programs advertised online. These investments are usually Ponzi schemes, and victims will lose all their money if they collapse. If you have been a victim of investment fraud, report it to the appropriate authorities. The sooner you file a report, the more likely you will recover your losses.
Offers That Sound Too Good to be True
Any investment opportunity that sounds too good to be true is likely a scam. Reputable investment professionals never use high-pressure sales tactics or tell you to “act now.” If you get an offer in person, by phone, via email, or from a friend, call the firm and check their registration with your state securities regulator. You can also check the firm’s website for any comments from investors. If you see any edits, markings, or evidence of tampering, consider this an additional red flag.
In addition, if you are promised a higher rate of return than the market average, this should be a red flag. All investments carry some risk, and returns usually follow the markets. Additionally, it would help if you were suspicious of any investment offering that requires you to advance funds to invest. It is a common method for investment fraudsters to steal money from unsophisticated victims. Many investment fraudsters find their victims on social media. Fraudsters may impersonate brokers, investment advisers, or other sources of market information and lure people with fake promotions on Facebook and Twitter. It would help if you were especially wary of any investments promoted through these platforms, as they can be difficult to verify. If you have been a victim of investment fraud, file a report with the appropriate authorities as soon as possible. It will help prevent further damage to your credit file and financial accounts and may increase your chances of recovering any lost funds.
Impersonation Schemes
Fraudsters can use a range of tactics to impersonate people or organizations. This includes sending you a call, text message or email that appears to come from your bank, the police, a government department or even a friend or family member. They will try to convince you to pay or move money to a safe account. Think before handing over your personal information or money. If something seems too good to be true, it probably is. Also, rely on something other than social media as the primary source of investment information. Scamsters can manipulate data to appear legitimate, so be suspicious of new posts on your social media accounts or DMs that promote a particular stock. Pump-and-dump schemes are securities fraud in which criminals promote over-the-counter (OTC) penny stocks on social media and then dump them. They usually inflate the share price by spreading false or misleading promotional campaigns and duping investors into buying the stocks. The stock prices then drop, and the criminals pocket the difference.
Another common type of investment scam involves fraudulent annuities. Fraudsters will pretend to represent well-known companies or investment professionals and encourage victims to wire funds to them. They can then take advantage of the victims by using their accounts to steal money related to pensions, retirement savings, or insurance policies. In a recent case, a Missouri woman pretended to be an employee of BB&T and convinced victims to wire payments to her. She was arrested and faces up to 20 years in prison.