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What to keep in mind when spotting a dodgy investment

Investment scams are white-collar crimes by definition but given the amount of lives criminals often ruin with such fraudulent schemes, some of them are actually much worse than violent crimes. As even seemingly legitimate investment bankers and licensed brokers can turn out to be scammers, here’s a list of tips that should help the average citizen spot dodgy investment plans, before it’s too late.



Don’t always trust the next big thing

GPB Holdings is being investigated by multiple state and federal bodies simultaneously, while there have already been accusations of the company running a Ponzi scheme on its investors. If you have lost money by investing in GPB due to the negligence of your broker, it might still be possible to recover your investment by filing a FINRA arbitration claim, with the help of the Silver Law Group.

The lesson to take away from all this is that dodgy investment schemes can often be presented as the next big thing by even investment brokers. If everyone is doing it, remember to beware of the herd mentality.

Verification fails

Fortunately, not every fraudulent investment scheme out there is as well choreographed as GPB was, which means that a simple verification check should reveal most of them to be what they are. Check the scheme’s and even your broker’s authenticity by verifying their credentials from the Official FINRA website.

The classic “too good to be true” investment scheme

If the investment scheme is being pitched to you with the promise of returns that no other legitimate bank or investment institution can even come close to competing with, it is without a shadow of a doubt, a scam to steal your money from you. The lure of “high returns” still manage to scam unsuspecting citizens, unfortunately, which shouldn’t really happen in this age of information. These are mostly targeted towards the less educated, rural and elderly population.

The non-existent guarantee

Mutual funds, direct share investments, etc., do not come with a guarantee. (Source)

Now, most people know about the scheme we just discussed above, so fraudsters will often try to deceive people with the promise of “guaranteed” returns instead.

Mutual funds, direct share investments, etc., do not come with a guarantee because they are always subject to market fluctuations, which is embedded in the very structure of such investments. Therefore, when a share broker is trying to convince you to invest in a new company, with the promise of guaranteed returns, it’s a dodgy plan. Even if a company has huge potential, no legitimate agent in the US should be offering you a guaranteed return because guarantees do not exist here!

There is a time limit and it’s very short

Any fake agent trying to defraud someone is going to be in a hurry, except in certain situations where the scheme is particularly targeted to scam a rich person, group or even a company. In general, though, if it’s a limited time offer which will expire within a very short time, it is a sign to look out for.

Professional fraudsters are becoming more and more resourceful, as well as gaining access to technology that can be misused to make themselves seem legitimate even to probing government officials. Now is the time to be careful with your money and your investments.

DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation for writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.

Boris Dzhingarov graduated from the University of National and World Economy with a major in marketing. The founder of Cryptoext, he writes for several sites online such as SEMrush, Tweakyourbiz and Boris is the founder of Blog For Web and MonetaryLibrary.