Fraudsters will attempt to force you to put money into a fund before you investigate. Do your own research to stop fraudsters. It's not enough just to ask for more details or references fraudsters have no incentive to provide you with the information you need. Do your own investigation. Ask questions to find out more.
Make sure you do your homework before investing
Unsolicited emails, message board postings, and company announcements should never be used as your sole source for your decision-making. Before investing, be sure to understand the company and the products it offers.
Get to know the salesperson
Even if you're already familiar with the person who promotes the investment, take some time learning about them. Make sure you know if the people selling securities to you have the right to sell securities in the state where they are located and whether they or their firms have had issues with investors or regulators. You can review the disciplinary history of brokers and advisors free of charge by through the SEC's and the FINRA's database online. You may be able to obtain more details from the state's regulator for securities.
Be wary of offers from unsolicited sources
Be cautious when you get an unwelcome solicitation to buy a business or read about it being praised on the internet, but are unable to find actual financial information on it from independent sources. It could be a "pump and dump" scheme. Avoid investing in foreign or offshore investments. If something goes wrong it can be difficult to figure out the reason and locate money sent abroad.
Security online
Fraudsters have a lot of opportunities online and on social media sites. Protect Your Social Media Accounts for tips on protecting yourself online.
Know what to look for. Make yourself knowledgeable about different types of fraud as well as warning signs that could indicate the presence of fraud in investments.
The red flags of fraud and common persuasion tactics
Are there ways to prevent wealthy, financially smart people from becoming victims of private placement program scam? Studies have shown that fraudsters targeting investment victims use a variety of persuasion tactics that are specific to their psychological profiles. These are the warning signs you need to be aware of:
If it seems too good to be true, it is
Be wary of "phantom riches": Compare the promised yields with the current rates of return on well-known stock indexes. Any investment option that promises you'll get a lot more can be very risky and means you might lose funds. These promises could be a sign of fraud or a high risk.
Guaranteed returns
Every investment is accompanied by a degree of risk. This is evident in the rate of return that you are likely to earn. If your money is safe, you'll most likely receive a lower return. The high returns come with a risk, possibly including a total loss on the investments. Fraudsters will spend a lot trying to convince investors that the high returns "can't be missed" or "guaranteed".
Beware of the "halo effect"
Investors could be fooled by the "halo" effect, which is when a con artist appears reliable or liked by others. False credibility is possible. Check out actual qualifications.
Everyone is Buying It
Beware of sales pitches that emphasize how "everyone invests in this, and you should, too." Consider whether you're interested in the product. This could mean that the sales pitch is focusing on how many people have bought the item.
Pressure To Send Money Right Now
Scam artists often tell their clients that it is a once-in-a-lifetime offer and that it will disappear tomorrow. However, resist the urge to make a quick investment and take the time you need to investigate before sending money.
Reciprocity
Investors are often lured by scammers who offer free seminars. They think that if they perform an act of kindness for you (such by offering a complimentary meal) it will be a great favor to them and will be enticed to invest in their products. There's no reason to hurry into making the investment choice. Take advantage of a lunch at no charge and do your investigation into the investment and the person selling it before making a decision. Make sure that the investment is right for you and that you are aware of what you are buying and the costs associated with it.