- Be very cautious if someone you know tells you they made a lot of money quickly from an investment. Many times the fraudster has paid this person a lot of money, so he or she will tell a lot of other people about the “opportunity” and get them to invest. Your friend or associate may not even know he or she is involved in a scam.
- Be very suspicious if someone tells you that an investment “has no risk.” All investments have risks, so ask for a business plan, prospectus or other document that outlines the risks and instructs you on how to get your money out. If the person can’t produce anything like that, don’t invest.
- Contact your local Attorney General’s Office or your state securities agency and ask them questions about the investment you planning to make. Ask about the salesperson who is promoting this “investment opportunity” and about the company he or she is representing, including whether or not the company is licensed to sell in your state and whether or not the investment is properly registered to be sold to consumers in your state. If the investment company and/or sales person are not registered, don’t invest.
- Don’t be pressured into investing before you have a chance to investigate the “opportunity.” Just because someone you know made money, or claims to have made money, doesn’t mean you will too.
- Watch out for investments that are heralded as “onceinalifetime opportunities,” especially when the person promoting it says the recommendation is based on “inside” or “confidential” information.
- Contact the North American Securities Administrators Association (NASAA), the oldest organization devoted to investor protection, tollfree at 188884NASAA. They will give you more information about investments and advise you on how to protect yourself from scams.
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