As if sour news in the Gulf and about the economy were not enough, the advent of the summer travel season also brings with it the latest renditions of con artist schemes designed to ruin your day. For those of you who have managed to save in these tough times, you must be doubly aware of the potential for investment fraud. The FBI ascribes over $400 billion in annual losses to this criminal activity alone, and this figure does not include legitimate promotions that trick you into buying overpriced items as if they were valuable collectibles.
Although you cannot change the latest economic news, you can protect yourself from the unscrupulous element of our society. They are definitely well organized and trained to appeal to your greed, particularly when times are tough. You must be your first and last line of defense by being prepared mentally to resist attempts at subtle manipulation and by becoming aware of the typical scams and warning signs that signal a con artist may have you in his gun sights.
The forex market presents a good example of how crooks operate in today’s electronic world. This form of trading has gained enormous popularity in the past decade due to the Internet and the flexibility of trading at home. Many crooks have enticed the unsuspecting novice trader with promises of riches with little risk if they would send money to open an account or buy special software. Wired funds were never seen again. The average victim lost $15,000. Fraud persists today and has grown dramatically requiring extra “due diligence” when selecting forex brokers.
The lessons above apply to all forms of investment, especially if you cannot see your business partners “face-to-face” because of the Internet. Always be skeptical of any unsolicited offers received via email, the phone, or in print. Review your banker or broker to assure yourself that they are financially sound and trusted in the community. Never send money or a blank check to anyone you have not verified as trustworthy. If a new activity is very popular, you can be sure that a crook has figured out a way to profit from it, and if it sounds too good to be true, then it most likely is – walk the other way!
Swindlers love to look polished, talk fast, and sell complex looking securities to the uninformed. There is always an urgency related to their pitch, since they are doing you a big favor by bringing you into a select circle of buyers. The urgency is to prevent questions or reviews by third parties, for example, your brother-in-law, the attorney.
The most famous scams have names attached to them since they have been so prevalent over the years with minor changes each season to improve upon their appeal. “Ponzi” schemes have grabbed headlines lately due to the arrests of Bernie Madoff and Kenneth Starr. Beware of “Pump-and-Dump” schemes where exciting emails tout the enormous success of a lightly traded stock. The broker is pushing the price up to suck in buyers, only to dump his stock when prices rise falsely. Lastly, avoid handing over money to a “Tipster” who seems to have insider knowledge on a “sure deal”.
Whether from a forex scam or securities fraud, the usual victims never expected it to happen to them. Their greed exceeded their cautious spirit. Believe it or not, educated people are the most susceptible. However, awareness is the best form of prevention, and a scam never happens if you do not allow it begin in the first place.
By Bryan Sayers http://www.forexfraud.com/forex-scam.html