- Regina Morrison Newman is the Shelby County Trustee.
Who remembers the song, Money for Nothing by Dire Straits? It was a hit in the 1980s. It is not reality when it comes to investing. Get rich quick schemes are, by in large, scams. The only people that get rich quick are the ones who convince you to “invest” your hard earned money with them.
According to the Federal Trade Commission in 2022 Americans lost about $3.8 billion dollars to investment fraud, which is more than people lost to any other scam, and more than double the loss reported in 2021. Locally in the last six months, we have had 51 Investment scams, mostly involving cryptocurrency, reported to the BBB for a loss of $130,742.58!
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Investment scams are huge right now
Investment scams often create the impression that you can “make lots of money” with “little to no risk.” They often start on social media, online dating apps, or from an unexpected text, email, or call. You may recall that recently several celebrities including Tom Brady, Kim Kardashian and Floyd Mayweather have been brought up on charges and/or sued for shilling for cryptocurrency companies without divulging that they were being paid for their endorsements rather than truly investing and making money from their investments.
We’ve put together a list of things to help you steer clear of investment scams:
- Don’t accept any unsolicited offers. If you get an out-of-the-blue call, text, or e-mail about “an amazing investment opportunity,” it’s likely a scam. Hang up. Delete. Walk away. Especially if they want you to take money out of your 401(k) to invest.
- Be very wary of buzz words. Certain phrases should raise a red flag for an investment opportunity. Don’t believe anything that is “guaranteed” to do well, or that offers low or no risk with a high return. Pyramid schemes (even if they are not called that) require you to bring in other investors to recoup your initial investment.
- Reject the high-pressure pitch. Scammers try to plant an image in your head of what life will be like when you’re rich. Don’t believe it. They’ll say “this is a once[1]in-a-lifetime offer, and it will be gone tomorrow.” Legitimate investments let you take the time you need to investigate before committing any money.
- Do your own research. Don’t make any investment until you’ve checked it out. Research the investment and the person offering it. Search online for the name of the company plus “review,” “complaint,” or “scam.”
- Don’t believe promises that you’ll make money or earn guaranteed returns. No one can guarantee you’ll make lots of money with little to no risk — anyone who does is a scammer.
- Don’t be swayed by a celebrity spokesperson. Almost all of them are compensated for their time and haven’t invested in whatever opportunity they are trying to get you to invest in.
- Do check for registrations with appropriate agencies. The investment industry is highly regulated. Be wary if investments are unregistered with the SEC (Securities & Exchange Commission) or other investment industry regulators. Also, check licensing for the sellers.
Recently I received an email from a financial institution that provided a list of scams to be wary about. Near the top of the list was investment scams. Get-rich-quick schemes and investments that are guaranteed to give you a huge return are nearly always scams so if an offer sounds too good to be true, it probably is.
Our goal with Wallet Warnings remains the same – to help you safeguard your money. If you have any questions or need any additional information about anything discussed here, please call (901) 222-0206. We are happy to help you avoid scams, fraud, and predatory lenders. You work hard for your money, and we want to make sure scammers don’t get it.
Regina Morrison Newman is the Shelby County Trustee
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