The Colorado Division of Securities has a little quiz to help you see if you know anything about investment fraud, or if you’re a scam victim waiting to be taken advantage of. In addition to the quiz which helps you see if you can spot an investment scam, there’s also a checklist to help you evaluate these investment “opportunities” in the future.
The checklist and my comments:
- Too little information – If someone wants your money, they should be ready to fully disclose all the details about their scheme
- Too many personal questions, too soon – Keep your personal data personal until you know more!
- Spotty or absent credentials – Who is this person offering you this opportunity? Who do they work for? What’s their background?
- Too much account activity – Are you suddenly paying a lot of commissions or unusual fees?
- Too much hype – All is rosy, this company is the greatest thing out there… This could be a “pump and dump,” in which you get excited, hand over your money, and the thing tanks. Bye-bye money.
- High-pressure tactics and guarantees – Beware of them telling you this opportunity won’t be around long and you might miss out. Even worse are guarantees of high rates of return. Scam!
- An offer to get your money back – If you’ve lost money in an investment scam, don’t pay someone who says they’ll get the money back for you. You’ll just be out more money.
- A stranger speaks up – Beware of people contacting you because of a supposed connection through church or a social club. Many scams prey on common interests – especially churches – to gain your trust and get you to fork over your money.
- It sounds too good to be true – If it sounds too good to be true, it almost certainly is. Stick with traditional investment accounts and known investment advisors. These fly-by-night make-a-lot-of-money schemes are almost always nothing more than a scam to get your money.