20 Jul Investment Fraud Protection: Why You Need It

Most people don’t even realize it is happening till it does – investment fraud. If you don’t recognize the warning signs you could land up being an investment fraud victim. Investment brokers and salespeople can take advantage of the unaware simply because it’s easy.

Here are some behavioral patterns you should watch out for if you wish to avoid fraud.

1. High returns and no risk

If you want to know how to protect yourself from fraud understand that if the offer is too good to be true, it probably isn’t true. Unsuspecting people who believe that there is such a thing like high returns (25%, 50%, or even 250%) for little to no risk are just being scammed.

If you are being promised high returns, good investment advice is that you do your due diligence. In fact, double it. High return guarantees and claims of low risk should immediately set off waning bells. The best fraud protection is using common sense and doing your homework.

2. The securities regulator should ensure that my investments are safe.

The best defense to stop fraud from happening to you is to be skeptical and educated. Securities regulators are your helping hand but they will not be able to shield you from the investment fraud before it reaches your portfolio. You are responsible for your own investments.

3. If a friend, church member or sports buddy introduced me to the investment I should be able to trust them.

This is another grey area for those who want to know how to prevent fraud. This strategy is called affinity fraud because it involves a person we are affiliated with and with whom we share common interests.

Sometimes, it could also happen that your friend or mentor has been deceived themselves and they are merely perpetuating the fraud, but in good faith. Honest people make mistakes too.

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