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Think you can spot a scam? It’s harder than you think

  • Published
  • By Debora Whipple
  • Director of Investor Education N.J. Bureau of Securities
Newark, N.J. --  Ever read the paper or listen to the news and shake your head at how someone could have fallen for a scam? We believe inherently that we would see past the wheeling and dealing. You know, that slick guy that looks like he came out of central casting. We would see right past that, right?

So, imagine you have gone into the swank office of someone highly recommended. The person greets you with a great handshake and has a good old personality that makes you feel at once comfortable. Okay, now picture how that person would look and sound. You can assume that same impression from dealing over the phone with the family adviser, or even meeting that agent at a lovely free lunch seminar. Got the picture? He or she sounds educated, maybe a friend of a friend or of your son, or possibly makes you feel as though he can help you to recover from the recent freefall in your retirement portfolio. He's a professional, right? Well, your instinct is correct -- he is a professional. He is a professional con artist, the same person that scammed the victim on the news, and you are next.

Securities fraud is crippling too many of us. It can rob you of your children's education fund, your seed money for long term growth or, worse yet, all of your retirement savings. How would that affect you or your parents? Could you lose your home if that money is absolutely gone? Would your parents have time to recover financially?

Being scammed is easier than you think. Fortunately, so is learning a few simple warning signs to help protect yourself, and the New Jersey Bureau of Securities of the Office of the Attorney General is there to help.

Our website, www.njsecurities.gov, is chock full of lists of trigger words and types of scams con artists frequently use.

The bureau can also provide free information about firms, investments and the people who offer them. Most brokers, broker-dealers, financial planners and investment advisors are honest and have clean records. But there are those who do not. Check out the Bureau's website www.njsecurities.gov or call (866) I-Invest for more information and get free reports on a broker (called a "CRD" Report through the Central Registration Depository) or investment advisors (called an "IAPD" Report through Investment Adviser Public Disclosure) to check on an individual's employment history, outside businesses involvement, exam scores, complaint and disciplinary histories, and more. The most important tool that the Bureau can offer you for smart investing is information - so do your homework before you give anyone money or permission to handle your investments.

In future articles, we will help you to understand types of frauds and how to avoid them. You'll learn how scammers disarm victims by trusted referral, club or church affiliation, or simply the strength of their own charm. Victims' stories can be heartbreaking and tragic, but they teach us a lot.

Here are a few tips for spotting trouble:
· Never be pressured into making an immediate decision - if a salesperson is making you feel pressured, it might be a deal that is illegal or inappropriate.
· Be wary of words like "guaranteed" or "risk-free" - the fact is that all investments can lose, as well as earn money.
· Question unrealistically high investment returns - if a broker touts a return that sounds too good to be true, it probably is.
· Review your statements and if you see unauthorized trading or missing funds, it could indicate that there is misconduct by your broker. It does really happen! Demand answers to your questions about your accounts - it's your money.

Visit our website at www.njsecurities.gov to view videos of an actual fraud cases and other information about our enforcement cases, press releases, interactive educational games and much more. If you have any specific securities-related questions or requests for future securities related articles, please let me know.

The Bureau also participates in educational workshops offered by the joint base and Earle Naval Station.

Editor's note: Please contact Debora Whipple, 973-504-3615 or the base Family Support or Personal Financial Management office for more information on this and other services that they can provide.

The Bureau does not make any recommendations for specific investments or referrals for individual agents or broker-dealers.