Avoid Becoming a Victim of Fraud

Ways to Avoid Becoming a Victim of Fraud 

No investment is risk-free, though scam artists will try to persuade you otherwise. In fact, generally the greater the potential for investment return, the greater the investment risk. Be wary of anyone who promises a rate of return better than what similar investments are paying or who “guarantees” the investment will not fail.


A con artist often gains the trust of investors by posing as an expert offering a complicated, difficult-to-understand investment. And while it can be hard to spot a swindler, you can help protect yourself by taking a few simple precautions. 

Don’t Trust Strangers or Their Promises

  1. Be extremely cautious when strangers contact you by telephone, email, or in person, even if they claim to represent an organization or institution you know including the bank where you have an account. Never share your Social Security number or driver’s license number with them.
  2. Be wary of advertisements that give little or no information other than an 800-number, e-mail address, or website to contact sales representatives.
  3. Be skeptical about claims that an investment will yield extraordinary returns on your money in a short period of time. If the opportunity sounds too good to be true, it probably is.
  4. Beware of any financial professional who suggests putting your money into something you don’t understand or who urges you to leave everything in his or her hands.
  5. Never be pressured into making hasty investment decisions or commitments.
  6. Always refuse demands for an immediate decision. Some swindlers use high-pressure sales techniques that require immediate money commitments because “tomorrow will be too late.” Be especially wary if you are told that the offer is “just one of two remaining openings.” If in doubt, wait, and do more research.
  7. Never send money in response to a phone solicitation. If you are contacted over the phone, do not make an immediate decision. Instead, ask for written information about the firm, the salesperson, and the investment. If a salesperson hounds you using high pressure tactics, hang up the phone.
  8. Never, ever sign a blank form.


Be Inquisitive: Ask Questions and Check the Facts

Legitimate, registered investment companies and individuals will provide you with written materials that clearly explain the nature of the investment, the potential for loss, short and long-term tax implications, and any fees you will be charged, among other things. If the seller has little or no written information about the investment or its past performance, you should be extremely cautious and probably not invest with the seller at all. Don’t be embarrassed to ask about things that aren’t clear to you. Remember, no question is dumb or silly when you are deciding how to invest your hard-earned money.


Contact Trusted Sources for Help

Often, smooth-talking con artists will have answers to your questions. They may or may not be true answers. That’s why it’s important for you to do some further investigation.


Here’s what you should do:

When you need advice, consult third parties like your lawyer or accountant. Contact the New Mexico Regulation and Licensing Department, Securities Division by calling at (800) 704-5533 to find out if the company issuing the securities and the persons selling them are properly registered and have not violated the law. If the person or company isn’t registered or has a history of trouble with authorities, you should proceed with extreme caution, and the best approach is to walk away.
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