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Recently I attended a seminar “Spot the Red Flags of Fraud” hosted by the Financial Industry Regulatory Authority (FINRA).  Ironically, in the middle of the seminar I get a pre-recorded spam marketing call on my cell phone trying to get me to sign up for some rip off web service.

It seems that everywhere, every day, we are bombarded with “offers” to help us or make us richer yet designed to squeeze some blood from a turnip.  Personally, I have no trouble quickly deleting such messages from my computer or phone, laughing at the hideous TV ads or even being a little rude on the phone if I actually get a live person trying to get my money.  But many people are a little too nice when it comes to allowing a cleverly designed sales scheme pitched by a nice sounding salesperson to take hold of their emotions.

Here are some of the lines you may hear, all designed to snag you into their web.

  • How would you like to make some easy money?  Run!  There is really no such thing.  Success takes planning, time and hard work.
  • This investment opportunity is risk free (or has a guaranteed return).  Do not be fooled.  Investments are never risk free and guaranteed returns have conditions.
  • This product is available for a limited time only.  Do not fall for it.  They’ll be more than glad to take your money next week or next month just the same.
  • Everyone is trying to get in on this (or many of your neighbors, co-workers or family and friends are doing it).  So what!  Just because all your neighbors are jumping off a cliff, why should you?  Consider this: The majority of people are not doing so good financially, so do not copy them!
  • The sales associate looks/sounds so professional.  So does Satan.

As the old saying goes, if it sounds too good to be true then it probably stinks.

Okay, so we’re all safe from these pick up lines, right?  After all, it is usually just unsophisticated, uneducated people who fall for this, right?  Wrong.  Here’s the demographic that falls for such lines the most:

  • Male
  • Married
  • 55 to 65 years old
  • Financially literate
  • College educated
  • Self reliant
  • Recent change in financial health (or way “behind the curve” financially with lots of time to make up for)
  • Risk takers (always open to new investment opportunities)
  • Already owns high risk investments
  • Relies on family and friends for financial advice
  • Fails to check the background or registration status of products/sellers

Sound like anyone you know?  We know many who fit this mold too.

Here’s how we can avoid being scammed.

Ask questions, such as “Are you licensed to sell this product and is the product registered?” and then verify it.

Avoid “free dinner” type presentations that make you feel an obligation to reciprocate since you received something.

Avoid high risk investments.

Get second and third opinions in the investment, not from family and friends but from professionals (not salespersons) in the field.

Develop a “refusal script” for when you get calls or are approached with the “opportunity.”

Protect your asses! For more information, try these very useful resources:

Save And Invest (get free video, Tricks of the Trade)

Financial Industry Regulatory Authority

Washington State Department of Financial Institutions (find similar website for your state)