E-Mail boxes are filling up with more offers for opportunities than any other kind of unsolicited commercial email.
That’s a problem because many of these offers are scams!
Common themes of investment fraud pop up repeatedly over the years.
The Internet has added to the mix, opening a new way to draw in the unwary and unquestioning, with little recourse left for them when money disappears down a scam drain.
Investment schemes promise outrageously high rates of return with no risk.
One version seeks investors to help form an offshore bank.
Others are vague about the nature of the investment, stressing the rates of return.
Many are Ponzi schemes, in which early investors are paid off with money contributed by later investors.
This makes the early investors believe that the system actually works, and encourages them to invest even more!
Promoters of fraudulent investments often operate a particular scam for a short time, quickly spend the money they take in, then close down before they can be detected.
There’s an important question anyone should ask when offered an investment opportunity that sounds “too good to be true!”
Why would this one investment have so much greater a performance than the next investment?
This is the exact question everyone should ask themselves when hearing promises of an outrageous return on an investment.
If it sounds too good to be true, it usually is!
In the simplest form, (the pump and dump scam) a con artist is purchasing a significant amount of a security at a low price.
The value of the stock is “pumped” up when the individual sets up online bulletin boards, chat rooms, “spam” (email junk mail) or sends out newsletters with inflated, impressive and false information about the stock.
All this Internet hype can run the price of a stock up.
The con artist then “dumps” or sells off his or her investment at a profit.
Another type of fraud promises easy money delivered on a silver platter, and every other glorified, descriptive adjective ever used!
Investors will hear:
“Guaranteed, hot tip, no way you can lose money, gotta get in on the ground floor,” and “If this doesn’t perform as I just said, we’ll refund your money, no questions asked.”
That can never be true because the investor will never be able to find the con artist who made the promises.
Those scam investment opportunities range from precious metals to land deals to buying into nonexistent companies.
In order to invest wisely and steer clear of such frauds, it is emphasized that prospective investors must research for and find all the facts on a company or money-making presentation.