Jun 23, 2023
Make sure your money and financial future are protected. The number of investment scams is rising, and they can devastate you.
It’s wise to rely on the expertise of professionals when it comes to investments. The Ohio Department of Commerce’s Division of Securities issued an investor alert to inform and help you stay vigilant. Protect yourself and your business against everyday deceptions, including:
- Affinity Fraud: A club or organization member uses their affiliation with the organization to establish credibility. Investors trust the promoter because of their status. Never trust someone automatically because of a common bond. You should thoroughly and independently research any investment offer received.
- Unregistered Products or Unlicensed Sales Representatives: Stocks and bonds can generally only be sold by licensed salespeople, so anyone without a license offering you to buy securities is a red flag. Unregistered investments are promoted as low-risk or no-risk and high-profit.
- Ponzi Schemes: As a phony “investment management service,” Ponzi schemes operate by raising money from new investors and paying existing clients. There are no actual investments, and the fraudulent structure collapses when new money dries up - so investors receive little or no payout.
- Investment Seminars: Beware of investment seminars that promise big profits with little effort. Examples include house flipping, stock market day trading, commodity investments and other get-rich schemes. The promoters get rich from seminar fees or from selling books and audiotapes. Check for complaints or fraud before attending a seminar.
- Oil and Gas Wells: Despite legitimate oil and gas investment opportunities, many fraudulent deals occur outside the state. Ohio Department of Commerce says out-of-state schemes make it hard to uncover fraud and less likely that “investors” check the physical well site.
- Real Estate: Investing in real estate can be a legitimate investment for Ohioans, but Real Estate Investment Trusts (REITs) pose a risk. Non-traded REITs sold directly to investors may be much riskier than conventional REITs traded on a stock exchange.
Here are some red flags of investment fraud identified by the SEC:
- Unlicensed investment professionals
- Aggressive sellers who may provide exaggerated or false credentials
- Offers that seem too good to be true
- “Risk-free” investment opportunities
- Promises of great wealth and guaranteed returns
- The “everyone’s buying it” pitch
- Pressure to invest right now
- Over-the-top, sensational pitches that may have fake testimonials
- Unsolicited pitches seeking to obtain your personal information
- Requests for investment payment by credit card, gift card or wiring money abroad or to a personal account
How to check the background of an investment professional and more investing information can be found on the U.S. Securities and Exchange Commission's website at www.investor.gov. Additionally, the SEC offers investor assistance by phone at 800-732-0330.
To help avoid potential securities fraud, investors can contact the Ohio Department of Commerce, Division of Securities’ Investor Protection Hotline at 877-683-7841.
Consumers who suspect a scam or have problems they can’t resolve should contact the Ohio Attorney General’s Office at www.ohioprotects.org or 800-282-0515.
