A new year means a new set of scams, and 2017 is no different. The allure of a get-rich quick pitch may be tempting to take a chance on, but those making the calls or sending the emails don’t have your best interests at heart. In many cases, they target retirees in order to siphon off some of your hard-earned cash built up over a lifetime of work, though anyone could be at risk. While the sell itself may seem spontaneous, these scammers likely have detailed information about you and your finances.
Because understanding what to look for when a scammer targets you is an important step to take when protecting your hard-earned finances, we’ve put together this list of tips to avoid falling into a trap.
Boiler Room Scams: Also known as “pump and dump” scams, scammers most often start their scheme by calling a target with a “can’t miss, must act now to participate” offer to purchase a cheap microcap or penny stock. Their goal is to get as many people to invest as possible to drive up the price of each share before the scammers dump all shares they hold for a quick buck, leaving everyone else’s investments essentially worthless.
Scammers often use stocks that are related to a trending hot-button topic to gain interest from their marks – today it could be the latest solar energy company, tomorrow it could be a company in the legalized marijuana industry. In the past, scammers would simply cold call randomly selected numbers, but new schemes have started to target people who visit websites that promote cheap stocks or publish investment newsletters.
Recovery Scams: Unfortunately, people who fall prey to one scam are often targeted again. In these types of scams, the person running the scam may offer to swap your bad investment for a “better” one in order to help you recover your losses, or may offer to buy your shares back at a premium as long as you pay an administrative fee to start the transaction. Just like in boiler room scams, the scammer will likely try to rush you by stressing the importance of acting fast, or they may send you official-looking documents from seemingly reputable organizations. Once you pay this upfront fee, the scammer will disappear without providing the promised assistance.
Binary Options: In these types of scams, victims are offered a type of options contract where the payout is dependent on a yes-or-no outcome, like if the price of an asset will fall below or rise above a certain price point. Once the option expires, investors are supposed to either receive a set amount of money or lose their entire investment depending on if they were correct. That’s a risky enough investment on its own, but scammers may require their investors to pay to receive their money, may deny requests to return funds, or may not even deposit the funds into the investor’s account in the first place. In many cases, the scammers may be operating from outside the United States, increasing the potential risk factor.
At Meyer Wilson, our investment fraud attorneys are committed to providing victims of fraud with the legal representation they need to recover their losses. If you were the victim of a scam, contact us today by calling our firm to tell us more about your case or fill out our online form to start out with a free case consultation.