How to Avoid Investment Fraud

There’s a reason Bernie Madoff was sentenced to a whopping 150 years in prison—he conned his investors out of $65 billion of their hard-earned money. Worse yet, he managed to destroy countless lives in the process.

While Madoff has been the poster child for investment fraud in recent years, the sad reality is that he’s only one of the many scammers out there who prey on the innocent.

Investment fraud is as major problem lately, and with the advent of email and the Internet, thieves are having an easier time than ever conning their victims left and right. And it’s not just the elderly who are getting scammed. Even smart, sensible people are falling victim to investment fraud these days.

Don’t Get Fooled

If you’re looking to avoid becoming a statistic, there are certain steps you can take to protect yourself:

Make sure the person offering you an investment opportunity is properly credentialed. Anyone who works as an investment advisor or broker is required to register with both FINRA (the Financial Industry Regulatory Authority) and the Securities and Exchange Commission (SEC). FINRA has an online BrokerCheck tool that allows you to access information on any licensed professional, so before doing business with someone you don’t know, look that person up.

Unsolicited Offers

Beware of unsolicited offers. If someone you’ve never heard of finds your number or email address and tries to entice you with an offer, make sure to vet that person before committing to anything. If you can’t find any information on the person in question, that should raise a red flag.

Steer clear of opportunities that seem too good to be true. There’s absolutely no such thing as a risk-free investment, and anyone who tries to sell you on one is most likely running a scam. If someone tries promising you an overwhelmingly large return or claims that your profit is “guaranteed,” run away.

Milwaukee Scammers

Don’t succumb to pressure. Scammers have a way of really hitting their victims with a hard sell. Don’t be fooled into acting hastily because the person you’re talking to is stating that his or her offer is a once in a lifetime opportunity that will run out within the hour. If you are applying for a title loan, be sure to use a trusted Milwaukee title loan company. Any respectable investment professional will understand the need for you to think before pulling the trigger.

Don’t invest in something you don’t understand. Some investments are more complicated than others, but if you’re being sold on something that actually doesn’t make sense to you, there’s a good chance it’s just plain not legitimate.

Educate Yourself

Always research your investments. Remember that by law, stocks and bonds must be registered with the Securities and Exchange Commission (SEC). If someone tries to sell you something and you can’t find documentation on it, consider that a bad sign.

Remember, when it comes to investment fraud, scammers don’t discriminate. Just because you’re young and savvy doesn’t mean you’re immune to being a target. A big part of avoiding investment fraud is using common sense and trusting your gut. If something doesn’t seem right, it probably isn’t, and you’re better off erring on the side of saying no and walking away.