Six Ways to Spot Con Artists
They become part
of the crowd.
con artists disguise their true motives by blending in with others in your
group, whether that group is political, community (such as the local senior
center), religious, or other. They get to know people in the group and use
them to spread the word about a great investment.
They dress for success.
Con artists can appear very professional and successful or look
like the person next door in more casual wear. They also may have impressive-looking
offices, or give you the idea they do. Be suspicious, however, if you
have to meet them at a restaurant or coffee shop and they have a post
office box rather than a street address.
They often push complex and vague financial products.
Investing can be confusing and con artists know it. They are ready to help
you with your investment decisions. Dont let them. When it comes to
your money, think through all the options. Never give someone control of your
money just because you think you are too old, too young, or too financially
They know what buttons to push.
Skilled con artists know how to prey upon your emotions by inferring that
you will not have enough money for retirement or that the investments
you have are not earning enough. Do not make investment-related decisions
based only on your emotions.
They are fair-weather friends.
When you first meet, con artists are friendly. They take a personal interest
in you. They call back when they promised. Each time, they tell you even
more good things about the investment. However, once you have invested
your money, contact with the con artist dwindles and then stops altogether.
Danger sign: They dont return your phone calls or emails, or their
phone is disconnected.
They will tell you what you think you want to hear.
Every investment involves risk. But to hear a con artist explain it, the
investment can't fail. Trust yourself when something sounds too good to
be true, especially when you hear claims like these:
got a hot tip - this stock will go through the roof."
"Your return is guaranteed. There's no way you can lose money."
"Get in now or you'll be left out in the cold. We'll send a messenger
over tomorrow to pick up your check."
(Con artists often use this device to avoid federal mail fraud charges.)
"This deal is so great, I invested in it myself."
"If it doesnt work out, we'll refund your money, no questions
Remember: Investment opportunities that seem too good to
be true probably are. Be especially careful if the salesperson downplays any
downside or denies that risk exists.
- Big return with a quick turnaround
- Guarantee return on investment
- No risk
- It is backed by the government
- No information
LaVonne Treat says she missed some of the red flags when
she invested in a goldmine. See her story.
Watch out if a financial professional is reluctant to provide information
on the following:
- The background, education, and work experience of the
deals promoters, principals, or general partners
- Information on whether the money you invest will be segregated
from other funds available to the business
- Written information on the business financial condition,
such as a balance sheet and bank references
- The track record of the business and its principals
- The salespersons name, location, employer, background,
and the commission or other compensation he or she will receive
- The salespersons real interest in the venture and
- Their licensing status. Those selling securities must
have a securities license with a regulator such as a state securities agency
or the Financial Industry Regulatory Agency (FINRA). Check and verify licensing