Invest Wisely with SmartCheck.gov

03/15/2018 6:00 am EST

Focus: COMMODITIES

Dan Rutherford

Deputy Director, Office of Customer Education and Outreach, U.S. Commodity Futures Trading Commission

 

When it comes to checking the background of your financial professional, you shouldn’t take a “one and done” approach. It’s wise to check the background of the individual or entity at least annually.

If you haven’t checked the registration or disciplinary history of your advisor or broker recently, then take a few minutes to use the online resources at SmartCheck.gov.

Common Targets

Everyone believes it won't happen to them. They’re too smart or too careful to become victims of investment fraud. Still, each year, Americans who are smart and careful find themselves as victims of fraudsters. 

The typical profile of a fraud victim is a college educated, investment savvy, 50- to 60-year-old man. Fraud doesn't occur because a victim lacks competence or is greedy. It occurs because fraudsters are expert thieves who use logic, lies, faked credibility and other tricks to build confidence, before they steal.

Five Red Flags

Fraudsters may try to hook you with any kind of investment—from virtual currencies to gold—but they tend to use the same ploys to get you to hand over your money, including:

  • Guarantee of no risk with high rates of return. Investors should consider whether the salesperson is dangling improbable returns or guarantees. It’s important to remember that all investments carry some risk.
  • Limited time opportunities. Investors should be cautious any time they are pressured or rushed into making a decision about an investment opportunity. Is the offer described as being good for only a limited time or in a limited quantity? Most legitimate offers will be there tomorrow.
  • Exclusive offers just for certain people. Are you being led to believe you are part of a special group being notified? When someone talks about people you know investing in the opportunity and that you shouldn’t be left out, it’s probably a good idea to keep your money in your wallet until you learn more.
  • Special discounts or other “favors.” When the person on the other end of the trade offers to do a small favor for you, it may be a ploy to distract you from the business at hand. It’s best to stay focused on the opportunity, not to look for bargains.
  • Namedropping. A con artist will try to build credibility by appearing successful, claiming affiliation with a reputable organization or touting a special credential or experience. Check out the seller’s actual qualifications at CFTC SmartCheck.

True Fraud Stories: See if you can spot these and other red flags

  • This video features a retired Air Force officer who was taken in by an elaborate silver scam. The story highlights a number of fraud warning signs and tips for all investors.  

This article was prepared by the Commodity Futures Trading Commission’s Office of Customer Education and Outreach. The article is provided for general informational purposes only and does not provide legal or investment advice to any individual or entity. Please consult with your own legal adviser before taking any action based on this information.

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