An official website of the United States government
A .mil website belongs to an official U.S. Department of Defense organization in the United States.
A lock (lock ) or https:// means you’ve safely connected to the .mil website. Share sensitive information only on official, secure websites.

Article Display

Tips to recognize frauds, scams, more

  • Published
  • By Debora Whipple
  • Office of the Attorney General
MCGUIRE AIR FORCE BASE, N.J. --  "College Planning Seminar!" "Enjoy Financial Security in Retirement!" "Investment Seminar!" When a free seminar is advertised or even one offers a free meal, if considering attending, be careful! No, the food is not poisoned, but the event could still make someone sick. 

Seminars can be good, but sometimes the offering of a free seminar can be an invitation to getting involved in an investment that, while appealing, is inappropriate for one's needs or even a scam. It could be a lure to get you involved in a fraud that involves an investment! Or, rather, that involves losing your money. This is where the saying, "check before you invest" comes in. But that process can be explained later. 

News of upcoming investment seminars often advertised through mass mailings or through ads in newspapers is most often conducted by agents that are registered with the state, as required by securities law. But some are not. It must be said, that most individuals who sell securities are honest and registered. But, there are those who steal millions from investors, sometimes in small increments from a lot of small investors and sometimes really large amounts from fewer investors. They all have something in common, the investor believes the fraudster, and the investor has money to invest. 

College planning could be of interest to the younger investors looking toward a future college degree. Adults who might be financially successful but who have overwhelming financial commitments such as mortgages, college payments, cars and more, might consider an investment opportunity because it holds promises of "guaranteed" returns, (a "red-flag" term for fraud.) And seniors, who happen to be the number one victims of investment frauds, are often lured with the tempting offer of free meals. Seniors, however, can be seen as pockets of money with liquid assets, not earmarked for houses or college savings. Seniors probably have cashed in investments and have assets available. If seniors think they're not rich -- then they might be told things to frighten them into investing in "risk-free" investments with suspiciously high returns or in investments not appropriate for their age bracket. Seniors as potential investors could mean big dollars for the good guy, but for the bad one, as well. That money, from all three levels of investors, might never be seen again. 

Investors are warned about scams, so, how can the investor really tell when they see one? First, most important and easiest, they should check with their state securities regulator who can tell them if the person is registered - as required by law. That "registered" term is important to the state securities regulator and it should be vitally important to the investor. Why? It's because it means the public has access to the background of the individual who is selling securities and is registered. A call to the state regulator, the N.J. Bureau of Securities can give the investor the background information about this person selling the investment -- their work experience, disciplinary history, exam scores and more. The investor should have this information in hand before investing and even if they have an agent already. Knowledge is a tool to be used -- it is so easy to become a trusting victim! Investors should be wary about doing any business with the individual who is not registered with the state, and should be. They should be curious about what other activity that person might be doing wrong. 

There are ways for the investor to recognize red flags for security fraud. Signs such as shady sales tactics, being pressured to make an immediate decision, affinity fraud, guaranteed, no-risk investments and unusually high investment returns. Warning signs also include spotty statements with discrepancies, statements that are missing, that are incomplete or seem altered. Watch for unauthorized activity on your account -- read your statements. There are other signs, too, but these are good start to a foundation for avoiding losing your money in a fraudulent investment scam. 

Now to recognize the fraudster. The scam artist might be friendly, appear knowledgeable and able to promise you good, great "guaranteed" or "no-risk" investment. It's not as though a scam artist looks devious - that wouldn't be too clever, would it? A few words to the wise -- individuals who commit these investment frauds and think them up are really good at it. Take notice because they often are depicted as "really nice" professionals or someone you trust as a new friend. When the investment promises unusually high returns for your money, do question it. When an inside deal is offered to a potential investor because of being let in on a deal that was given to a friend or because of being such a great person -- the investor should think, "why me?" The person selling the investment that has great ideas, is sharp and is looking out for "you," could be the scam artist. 

Every state has securities regulators. Here, it is the N.J. Bureau of Securities of the Office of the Attorney General. The bureau is there to help investors by providing free information for the asking. Investors only need to call their (866) I-Invest number for background information on these individuals selling and the investments themselves. Any investor would be wise to do this and use the bureau as a free source for knowledge of the investment and the agent. If anyone suspects anything fraudulent with their accounts, they should also call and speak to the bureau about it. 

The state securities regulator, the N.J. Bureau of Securities of the Office of the Attorney General can be reached at (866) I-Invest and has a Web site at www.njsecurities.gov. Use it. Read it. Look over the section marked "Enforcement Cases" and learn from reading about bureau cases. The website also has information on the top 13 scams, enforcement cases, press releases, checklists, downloadable investor education books plus an interactive scam game. E-mails can be sent to www.askbureauofsecurities.gov. 

The bureau does not make any recommendations for specific investments or referrals. Personal Financial Management Programs are conducted at McGuire. To reach the McGuire Family Support Center call (609) 754-5344. The bureau also participates in these educational workshops.