5 Ways to Spot Investment Scam

Some investment opportunities are straight-up scams. Ponzi schemes and other investment fraud is up 70% since the beginning of the Covid-19 pandemic. These fraudulent schemes are disguised as something trustworthy and lucrative.

So, how does one differentiate a perfectly legitimate investment from a conniving scam? Keep reading to find out 5 helpful tips to stay safe from criminal fraudsters.

Making Promise

For example, they might say that you will “undoubtedly make a profit” by investing with them. Or you may have a company tell you that “all our investments are risk-free.” Not possible.

A perfect example of this is the Ponzi scheme. Ponzi schemes (such as the infamous one run by Bernie Madoff) offer “guarantees” of abnormally high returns (20% or more). In 2009, Madoff was sentenced to 150 years in prison for swindling investors out of billions of dollars.

Low Risk, High Reward

Background Information

We recommend doing an internet search on the person and their offer before investing in anything. See if you can seek out any credentials that prove their legitimacy. If you can’t find any information, this is a very good indicator that the investment deal is a scam.

Fraudsters are usually very pushy and try to rush you into making a rash decision. They tell you you have to act “immediately” or else you’ll lose out on the deal.

Pushy Salesperson

When you are panicking, you’re less likely to be assertive and think things through properly – allowing the person to scam you. Sniff out pushiness for what it is: another red flag.

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