How it works
You receive a phone call out of the blue about an investment that promises a high rate of return and no risk. But to take advantage of this once-in-a-lifetime opportunity, you have to act today. The truth is the investment is questionable at best, and may not even exist at all.
What you should know
- Don’t trust promises of unusually high returns or risk-free investments. Every investment contains some amount of risk.
- Don’t feel rushed. Pressure to act immediately is a red flag of a scam.
- Be very wary of foreign or “off-shore” investments. If there is a problem, it will be much harder to get your money back.
- Don’t be persuaded by claims that “everyone” is in on the deal. Many scams target members of the same social circle or religious group to give victims a false sense of security.
- Don’t rely solely on the information the investment promoter gives you; a scammer can easily create phony materials. Always do your own research before investing your money – even if the person promoting the investment is someone you know.
- If you are considering buying stock, check out the company’s financial statements by using the Security Exchange Commission’s (SEC) EDGAR database (www.sec.gov/edgar.shtml).
- Verify whether the person contacting you is licensed to sell securities in Georgia by contacting the Georgia Secretary of State’s office at www.sos.ga.gov or 470-312-2640. You can also use the following resources to see if the person or company is the subject of any complaints or violations:
- BrokerCheck (https://brokercheck.finra.org/)
- FINRA’s “Scam Meter” tool (tools.finra.org/scam_meter) gives you a report of any red flags based on your answers to a few questions.