Financial fraud

As we age, we are more vulnerable to financial fraud attempts. We have worked hard to make sure we will not run out of money as we wander through retirement. Remember, the world is a vast place, filled with billions of people and just as many opportunities. However, occasionally, you will run into a con artist who will try to take you for everything you have. You may be especially vulnerable when you are venturing into unfamiliar territory – like the stock market. Of course, fear of being scammed is no reason to cower in your bedroom. Use these five recommendations to keep you – and your money – safe from crooks.

Keep your eyes open. Using an ounce of prevention will prevent you from incurring some large losses later. For instance, always ignore unsolicited e-mails and Internet chat-room messages thaturge you to buy a particular stock now. At best, a con artist could be pumping up the stock price before dumping shares. At worst, the recommendation might be for a completely worthless stock.

Keep your distance from aggressive salespeople. You should also avoid buying from salespeople who promise high returns,demand an immediate response, or press for personal financial information. If you do run into a salesperson pushing you to make an investment, ask for a prospectus and other written information before you agree to buy. This will not only give you more time to make an educated, thoughtful decision, it will also show fraudulent salespeople that you’re not someone to be trifled with.

Be realistic. Just because other investors have gotten big returns doesn’t assure that you will, too. In one con called a Ponzi scheme, early investors are repaid with money from later investors, who ultimately lose their money.

Be on the lookout for multilevel marketing scams. In these scams, 

distributors or sales agents earn money for recruiting other distributors or agents. Not only is this type of scheme doomed to failure (eventually, you’ll be unable to recruit more new members) – it’s also illegal. Before signing up for anything, print out all the information you can find on the company. Then contact your state or local consumer protection agency to find out if the company is legitimate.

Stick to what you know. If you’re new to a particular industry, then research the industry and individual companies before you invest. Be very wary of stocks that aren’t listed in respected publications or on major exchanges. Be very suspicious if you encounter a salesperson who is trying to push such a stock you. If you think that someone is trying to scam you, you can report him to the Securities and Exchange Commission in your area.

If a salesperson still will not relent, you can tell him that you never make investment decisions without involving your attorney. Give him your attorney’s contact information and request that he make a presentation to your attorney. Dishonest salespeople will generally turn tail at this strategy, leaving you and your cash unharmed.