“A fool and his money are soon parted.”
It was ever thus. Too much trust, basic laziness and a lack of proper knowledge can lead investors down a treacherous path to losses and potentially a one-way trip to Broke Ass Town.
The British Columbia Securities Commission has declared March as Fraud Prevention Month, and provided several tools to identify situations when someone might be trying to lure you into a scam… including a dude in a cheesy video.
“The ‘Fraudster Crooner’ video is entertaining in the way it shows how a fraudster thinks,” said Pamela McDonald, director of communications and education at the BCSC. “But investment fraud is anything but entertaining. We know that it ruins lives – an important reminder for investors to protect themselves.”
In the materials, the BCSC highlights five warning signs.
- NO RISK!
Don’t be fooled… there is always risk, however low, in any investment. Don’t put in more than you can afford to lose: figure out your own risk tolerance.
- PROFIT LIKE THE PROS!
Yes, professional financial advisors are in the business of making money, but there are no guarantees. Being sold on the premise of “insider information” or any other sort of exclusivity is a prime red flag.
- OFFSHORE, TAX-FREE!
Moving money out of the country can be a complicated process fraught with pitfalls. Scammers want your money (and their dealings) to be out of reach of regulators. Don’t let your greed or your desire for a lower tax rate goad you into a potentially bad situation.
- GET IN NOW!
Being pressured into a decision is a classic fraudster gambit. It can be used in conjunction with the “Profit Like The Pros!” angle to convince unsure investors. Don’t fall for it. Take as much time as possible to determine whether the offer is a fit for you.
- YOUR FRIENDS AND FAMILY CAN’T BE WRONG!
The ol’ Appeal To Emotion fallacy is the most insidious approach of all. Shady players do their best to appear trustworthy as they worm their way into your social circles and, ultimately, your wallet. Peer pressure is a strong force: if those close to you have already been sucked into the fraudster’s vortex, it can create irreparable rifts if you don’t go with the flow. Of course, the same could happen if and when the scam is uncovered.
More information can be found on the BCSC website.