Regardless of the industry, there have always been those who are looking to make a quick buck at the expense of others. If you follow the news, it seems that all-too-often there is a new story about someone who has, or has been, swindled. Each year those looking to scam people out of their money get a little more sophisticated, and each year the North American Securities Administration Association (NASAA) reports on the top investor threats.
The way these investor scams all work is to promise and show one thing, while delivering another. The fraudster looks to keep the investor confused, and thinking he or she is getting a great rate of return on their money. In actuality, the money is long gone, and the scam artist is moving on to his or her next victim. Below are some of the more popular ways people have been duped.
Job Related Scams
The JOBS act has provided potential employers with alternative ways to fund their enterprises. What it also did was give those looking to scam people another way to do so. The methods they use are often almost legal, they just twist the act enough that they can often make out with your money. By using a confusing act to begin with, they can confuse the investor to giving away their money.
Bernie Madoff became a household name in 2008 when he was arrested for running one of the largest ponzi schemes in history. With every big name that makes the news, there are many more that slip by and do not get caught scamming people out of their money. Any time an investment is given a guaranteed return, said to have made many people extremely wealthy, or is only available for a limited time, a red flag should shoot up.
Insurance agents that are not licensed to deal with securities use another less sleazy but still inappropriate tactic. Many will offer recommendations to sell securities and replace them with fixed annuities. Anyone who is not registered in the securities industry cannot make these recommendations.
Old Scams, New Tricks
The easiest way to get someone to give up their money is to use a system that has been proven to offer great rates of return. Of course the investment never gets put to use. During the recession people were scared. They had already lost a lot of money, and were looking to recoup the losses quickly. Enter precious metals, oil and natural gas, promissory notes, and real estate. All have been around for many years, and all have had their share of scam artists playing them. But when people are nervous about the economy, these alternative investments can seem to hold even better futures. Unfortunately, too often the future for many investors is losing what is left of their retirement plan.
Scams are nothing new. Throughout the years people have been scamming others out of their money, and too many of them get away with it. As new products come out, and new laws and legislations arise, the scams just get more sophisticated. By being aware of the most popular investor scams, you can protect yourself. If an investment opportunity comes to you unsolicited, or that seems too good to be true, it usually is. Do your research, a couple hours of your time could mean not losing your retirement accounts.