How to Avoid Investment Fraud

June 27, 2022

Investment fraud occurs when a person is tricked into investing money through offers that turn out to be too good to be true. An example of an investment fraud is a pyramid scheme. Anyone can fall victim to investment fraud. Contrary to what most people believe, it is not just the most gullible or vulnerable people who fall victim to investment fraud. Unfortunately, investment fraud can adversely affect a victim. For example, a victim of investment fraud may experience higher indebtedness. Also, if you fall victim to investment fraud, you may find yourself shying away from legitimate investments in the future. 

Fortunately, it is possible to avoid investment fraud. The following are some steps you can take to avoid investment fraud.

Professional scammers are relying on you not conducting research before investing. In order to avoid being a victim of investment fraud, it is best to treat every investment opportunity with skepticism. Conduct thorough research before investing in a business. For example, understand the product a company is selling and the market before investing. Many people invest in products without doing their research, only to be shocked when they realize the product does not exist or there is no market for the product.

Often, people fall victim to investment fraud because the investment opportunity is first presented to them by someone they know socially. Even if you socially know the person telling you about the investment opportunity, ensure you do your research before investing.

If, after conducting your research, you still are not sure if the investment opportunity is genuine, you are not obligated to invest.

Scammers know that people want quick profits that come with no risk. In a perfect world, that would be possible. However, the reality is that there is no such thing as a no-risk investment, and it takes time to make profits. The truth is that the higher the return, the higher the risk. Generally, if the deal sounds too good to be true, it probably is not true.

You need to be highly cautious if you receive calls or emails out of the blue telling you about an amazing investment opportunity. If you did not ask about an investment opportunity, it is best that you treat the investment opportunity being presented to you with skepticism.

Another thing that could indicate investment fraud is if someone says you need to act and invest immediately. Professional con artists are good at making potential victims feel they will lose out on a great opportunity if they do not invest immediately. Scammers use high-pressure sales to make people part with their money. If an investment is legitimate, you should be given enough time to think about your decision.

If you hear or read about an exciting investment opportunity, take time to speak to a third party. For example, you can talk to an attorney. An attorney can help you identify a scam and avoid losing your hard-earned money.

Have you heard or read about an investment opportunity and want help determining if it is legitimate? Have you fallen victim to investment fraud? Contact the Silicon Valley Investment fraud lawyers at SAC attorneys.