Don't Fall Prey to These Common Investing Scams

 

Investing scams often target people who have already lost money in an investment. They contact the investors to get a deposit, "refundable fee," or additional money. Often, these scammers will set up a makeshift office and use a professional website, toll-free phone number, or respectable address. It is important to stay away from them. Listed below are five common investing scams to avoid.

Unregistered IPOs

Be cautious about private offerings. Unregistered IPOs are typically sold by companies through private transactions called private placements. Private transactions are important sources of capital for American businesses, but they are also risky. Investors can't be certain a company will complete an IPO or that they'll be able to sell their shares when they do. Further, the fair market value of the shares may be based on speculative valuations.

Don't be fooled by the promise of massive wealth from pre-IPO shares. Many con artists use Regulation S to circumvent state registration requirements. Their goal is to trick you into thinking you're getting high returns with little risk. They also may sell securities that are illegal or unregistered in the U.S. or foreign countries. Don't fall for these common investing scams involving unregistered IPOs.

Ponzi schemes

Don't be lured by high-return investments. Ponzi schemes are infamous scams that rob people of their hard-earned money. Ponzi scheme organizers often offer high returns with very little risk, but the only focus they have is attracting new investors and making those promises to earlier investors. This creates the appearance of a legitimate business, but the truth is the opposite.

These schemes target older Americans and other optimistic people. They are more likely to be scammed if they have a higher income than average. They may also target people who have recently undergone health changes. Always check before making a decision. Beware of investment scams that ask you to pay advance fees for a service or product. Make sure to find a legitimate website that offers free educational materials. You can also check the SEC's website for information about investment scams.

Investing scams are another common type of scams. They involve putting up money for a questionable investment or nonexistent one. As a result, victims lose money. Advance fee schemes, which target unsuspecting investors, typically rely on false credentials and promises of significantly higher returns. If you are offered a guaranteed high return investment, it's most likely a scam.

False promises

Be wary of investment schemes with false promises. These investments may not only fail to deliver on their promises, but also affect the interests of all stakeholders. Moreover, investors should be wary of websites that use misspelled names, inaccurate contact details, or stock photos of fake people to run the company. It is a good idea to thoroughly research a company before investing, and always remember to report fraudulent investments. False claims should be avoided at all costs.

Be careful when investing with a cryptocurrency exchange. Many fraudulent exchanges use social networks to attract investors by promising high returns and low risks. It is vital to compare the promissory note's interest rates to those of other fixed-rate investments such as long-term Treasury bonds or FDIC-insured certificates of deposit. Investors should also make sure that the company is regulated and headquartered in the U.S.

False promises of triple-digit returns

While it is important to do your own research when investing, the promises of a prime bank are notorious for being a scam. These schemes often target conspiracy theorists and other investors who are looking to gain access to elite bank portfolios. In one case, securities regulators in North Dakota allege that a small group of salesmen abused religion to lure unsuspecting investors into signing loan agreements.