Fraudsters: Spot a wolf in sheep's clothing
Published Wednesday, May 2, 2012 10:41AM PDT
From ponzi schemes to well dressed financial shysters, it's quite common to hear about victims of financial fraud. While the potential of hefty return investments is attractive, it's critical to invest with someone you can trust.
The BC Securities Commission has just launched its "How to Spot a Fraudster" campaign to help investors understand and identify the warning signs of investment fraud.
A video released by the BCSC's InvestRight features a friendly, well-dressed and charismatic salesperson shooting a television ad -- lulling potential investors into a false sense of security.
"When you see this man you really like him," said Patricia Bowles, BCSC Director of Communications and Education.
"He's charming and he's very adept at shooting a commercial and so you're very impressed and then you realize that he's taken you."
The BCSC offers many tips about how to spot a fraudster. The first warning sign is high-pressure sales tactics, like telling you an investment opportunity won't last.
"That's when they say ‘you've got to get in now, because something's about to happen to the stock or the investment,' and again, there should be no time sensitive to any investment," Bowles said.
Be careful of family and friend-connected investments -- they're often signs of a ponzi scheme.
Also beware of the no risk investment, because that's simply not true, said Bowles: "If they tell you that they're lying through their teeth. Every investment has a risk attached, some more than others."
Watch out for investment pitches that offer opportunities only to a select few. A legitimate investment deal is open to everyone.
Other warning signs of investment fraud:
- Offshore or tax-free investments. There's no such thing as tax-free. At some point you have to pay taxes.
- A hard-to-reach investment adviser -- especially if they become unavailable as soon as you've sent them your cash.
- Do not rely on appearance alone. Scam artists often have impressive offices and addresses to portray themselves as legitimate professionals
Fraudsters require your trust and confidence and will work hard to instill a sense of security. In some cases, they may try to make you feel dependent on them for financial guidance or an investment plan.
An easy way to protect yourself is to run a background check on anyone offering to sell you investments.
Go to the BCSC website and see if the person is registered as an advisor or if they've ever been disciplined. You can also Google the investment advisor's name and see if they have a checkered past or maybe even criminal charges laid against them.
Watch CTV News for the full report from Lynda Steele, and an insider look at how to spot a fraudster…