- Guaranteed riches.
An opportunity that promises "guaranteed" returns should always be taken with a grain of salt. An opportunity that promises "guaranteed" returns that are significantly higher than the market average is a definite marker for investment fraud. Remember: Things that seem too good to be true are, in fact, too good to be true. No one can promise you guaranteed, high yield returns in good faith – they simply don’t exist. If you want a high yield product, you’re going to have to pay for it with added risk. Anyone who says otherwise is out to con you.
- "Hurry – this offer won’t last long."
Scam artists are experts at using a sense of urgency to push otherwise wary investors into shady investments and/or downright frauds. Any person who insists you have to act now, regardless of the reason, wants to ensure you don’t have time to think about the investment or investigate it. Insist on taking the time you need to do your research. With the plethora of investment schemes out there, it’s better to be safe than sorry.
- Vague answers and/or flimsy (or non-existent) documentation.
Before you part with your hard-earned money, you should understand why you’re parting with it and where it’s going. Ask questions, and make sure you get an offering statement, a prospectus, or some other form of documentation that describes the investment strategy, the risks and benefits, and the details (fees and costs, liquidity restraints, etc.). If you can’t get the answers you need, walk away. Whoever is pitching the "opportunity" to you is being vague on purpose.
- Dropping names.
Affinity fraud is popular among con artists, and they’ll often try to build trust with prospective investors by gaining the trust of other prominent figures in the investors’ community. If the main pitch for an investment opportunity is that your pastor, your neighbor, your boss, your mother, or a well-known celebrity is "in" on the investment too, double your research efforts. The name dropping is likely a cover-up for investment fraud.
- Glamorous or expert credentials.
Recent con artists have used their purported backgrounds as CEOs, vice presidents, and other big-name positions to drum up business and inspire trust. One alleged fraudster even used his status as an ex-FBI agent to attract investors. Don’t take anyone’s word as proof of his or her expertise. Do your own research to make sure you don’t get taken in by a fast-talking con with a glamorous, but bogus, resume.