Anatomy of an investment scam

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Courtesy: MGN Online

We’ve all heard the stories about people who have lost thousands, even tens of thousands of dollars, to investment scams and Ponzi schemes that offer a very high rate of return in a relatively short period of time – the whole “get rich quick” concept. Yet many people still fall for this scam. So if you see any of the warning signs listed below, walk away from the investment “opportunity.”

  1. Never believe anyone who says there is no risk; there are always risks in any investment.
  2. Be wary of claims of extravagant earnings potential.
  3. Get all of the details in writing.
  4. Avoid offshore investments.
  5. Before investing, check out brokers and dealers with FINRA’s BrokerCheck and the Alabama Securities Commission.
  6. Also check out to see if your broker or dealer has a history of complaints from customers.
  7. Diversify your investments.
  8. Watch out for anyone who stalls or refuses to return your principle or earnings.
  9. Beware of “reload” schemes, where the scammer tries to convince an investor to make another high-risk investment with promises extremely high returns or to recoup any prior losses.

Do you engage in risky investment behaviors? Check out FINRA’s Investment Risk Meter.

For more information, go to Ten Tips to Avoid Investment Fraud.

To find a trustworthy investment broker, go to

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