6 Ways To Beat Financial Fraudsters
Conditions today are ripe for financial scams. A recent report from the Financial Industry Regulatory Authority (FINRA) found that more than 80 percent of those surveyed were aware of having been solicited for a fraudulent offer. Worse yet, 40 percent of respondents could not readily identify classic warning signs of a financial scam.
In an environment like this, the only sensible option is to be more vigilant than ever against these types of swindles.
The right conditions for the wrong people
Why is this an especially dangerous time for financial scams? Conditions for both perpetrators and victims are primed for trouble.
Persistently high unemployment combined with the collapses of investment bubbles in real estate and gold in recent years have made many people financially desperate -- and some of those will inevitably try to pass their bad fortune along to others by taking advantage of them.Meanwhile, extremely low interest rates on savings accounts, money market accounts, and other conservative investments have people looking for alternatives. When these investors seek easy answers they are most vulnerable to a scam artist's pitch. FINRA found that 11 percent of those surveyed had lost money to a financial scam -- and that number may be underreported because people are often reluctant to admit having been taken. FINRA also found that people over the age of 65 are 34 percent more likely to be taken in a scam than people in their 40s.
Protecting your assets and informationWhat can you do to avoid joining the list of victims? Here are some tips.
- Treat information as if it were money. You not only have to guard your assets, but you also have to protect information that can be used for identity theft. Before giving your Social Security number or any bank account information, be sure you know who is asking and why they need it.
- Be realistic. A shocking amount of scams promise guaranteed high returns. Nothing is that easy. Higher returns are never guaranteed, and generally mean higher risk. Hang up the phone on anyone who tells you otherwise.
- Check every bank and credit card statement for unusual activity. Even if it's small, an unusual withdrawal from your checking account or strange charge to your credit card can be a sign that someone has tapped into your account.
- Treat limited time or secret offers as especially suspicious. "I need an answer tonight" or "no one's supposed to know about this" are spiels designed to get you to act before you have time to think or consult anyone. Ethical financial representatives don't sell that way.
- Always verify before responding. Whether it's by phone, email or in person, don't discuss anything until you get the person's organization and contact information. Before going any further, check that the organization is legitimate and that the person is an authorized representative.
- Go by facts, not by friendship. Too many people have been ripped off by people they know. A personal relationship should not alter your factual analysis of an offer.
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