You work hard for your money. When it comes time to put it to work for you, make sure you’re safeguarding your investments against fraud. The Federal Trade Commission reports that victims of investment fraud suffer a median loss of $16,000. To help keep more of your money safe, here are three common types of investment fraud schemes and how you can avoid them.
Affinity Fraud
Affinity fraud occurs when a fraud is perpetuated among a group, such a religious group, or a group that shares a common interest or hobby. Fraudsters often pretend to be part of the group and then leverage their relationships with members of the group to convince them that the investments they are peddling are legitimate.
Advance Fee Fraud
In an advance fee fraud scheme, investors are asked to pay up front in anticipation of a greater return that never materializes. The victim may be promised good or services, higher than normal rates of return on their so-called investment, or even a portion of lottery winnings. The fraudster takes the money but the victim never sees the returns.
Social Media and Internet Fraud
When looking to invest, many people turn to the internet for advice. They may even crowdsource investment information on social media. While you can find valuable information, you can also find individuals who use websites and social media profiles that look legitimate to perpetuate investment fraud. Always be skeptical when you receive unsolicited investment advice on social media.
To help make sure you don’t invest in a fraudulent scheme, always do your research when presented with an investment opportunity. Ask questions – about the investment advisor and the investment itself. FINRA, the Financial Industry Regulatory Authority, provides a list of questions you should ask and resources you can use to check the legitimacy of advisors and investments. And remember the old adage: if it sounds too good to be true, it probably is.
Visit regions.com for more information and resources on preventing investment fraud.
The information presented is general in nature and should not be considered, legal, accounting or tax advice. Regions reminds its customers that they should be vigilant about fraud and security and that they are responsible for taking action to protect their computer systems. Fraud prevention requires a continuous review of your policies and practices, as the threat evolves daily. There is no guarantee that all fraudulent transactions will be prevented or that related financial losses will not occur. Visit regions.com/STOPFRAUD, or speak with your Banker for further information on how you can help prevent fraud.