There are almost as many ways to run an investment fraud scheme as there are ways to operate a legitimate investment opportunity, but most con artists use at least one of these five phrases to gain a victim's trust and lure them into an investment scam:
#1. “It’s Guaranteed.” Whether the scam involves foreign exchange currency markets, real estate, precious metals, abusiness startup, or any other conceivable investment “opportunity,” most con artists will try to convince their prey that the purported investment yields either a guaranteed profit or a guaranteed return of principal. In actuality, almost all legitimate investment opportunities carry some risk, and legitimate investment advisors aren’t allowed to guarantee results. If someone says otherwise, he or she is lying.
#2. “Low Risk, High Returns.” In the investment world, the potential for profit is directly correlated to the level of risk. If you want the chance to reap high yields, you have to be willing to lose at least some of your principal. Anyone who says differently is out to con you.#3. “Game Changing Technology.” Fraudsters who make unsolicited pitches to their victims often try to entice interest with this phrase. They claim that a certain startup has just created a new miracle drug, developed an amazing new process, or made a major technological advance that is certain to change this or that industry. In reality, most “game changing technology” is created in large companies that have an extensive research and development budget, and such advances aren’t likely to be financed through cold calls or unsolicited emails. If someone is trying to convince you to invest in the latest “game changer,” consider how your name got on the list of people to call in the first place.
#4. “This is a Secret/New/Undisclosed Investment Opportunity – Don’t Tell Anyone!” Once again, ask yourself how you heard about this “secret” opportunity. Did you initiate the meeting or phone call that led to the sales pitch? If not, how did the promoter find you? Why are you being offered such an“exclusive” investment opportunity? It’s also worth asking why the offering firm or promoter would want the investment kept a secret in the first place. Such statements should serve as a major red flag that something is amiss.
#5. “Won’t Last Long.” There’s only one reason to insert this phrase into any conversation – to convince someone that he or she doesn’t have the time to think before acting. This is the #1 high-pressure sales tactic used by con artists, and it can be very difficult for some people to resist. Just remember: Not only do you have the right to take your time before parting with your money – it is the most intelligent thing you could do. No matter how “hot” an investment might be, you should have the time to call the SEC or your state securities regulator to check up on the legitimacy of it and its promoter before you make a decision.
Be on the lookout for these five phrases, and you’ll be one step closer to protecting yourself and your hard-earned money frominvestment fraud.
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Meyer Wilson represents individuals across the country who have been harmed by investment fraud. All of our cases are handled on a contingency fee basis and we never request a retainer of any kind. Contact us for more information or complete the online form on the top of this page and we will respond promptly.