Investment scams can take many forms:
- "Pump and Dump" scams induce people to overpay for worthless stocks.
- Affinity frauds are where someone lures friends and acquaintances into bad deals.
- Made-up opportunities promoted through social media.
- Crypto implosions involve celebrities luring people into shaky markets.
The Department of Consumer Affairs has rounded up tips and tools to help Cuyahoga County residents steer clear of high-risk markets and investment scams.
- Don’t act on unsolicited offers. If you get an out-of-the-blue call, text, or email about an amazing investment opportunity or promising you guaranteed returns, it’s a scam. Don't respond or click on the links in unsolicited texts or emails, because they can infect your device with malware.
- Be suspicious of investments offered to you by people you only know online. Scammers are increasingly befriending or flirting with people online to gain their trust to lure them into sinking money into phony investments.
- Reject high-pressure sales pitches. Scammers will often pressure you to act fast, saying that you’ll miss the opportunity if wait. Most scams are designed to get you so focused on your future life of wealth that you lose sight of the risks. Legitimate sellers will not rush you into a purchase. Always take the time you need to investigate an investment before you spend money.
- BrokerCheck - Use it to see if someone is licensed, as required by law, to sell stocks and other investments or to give investment advice. This free tool operated by the financial regulator FINRA lets you know if a person or company is licensed to sell stocks or other investments. It also lets you see if a seller's been in trouble with regulators in the past. FINRA's BrokerCheck hotline is 800-289-9999.
- Investor.gov - Use this site to look up companies that sell stocks to the public. While you're there, access free investment and fee calculators, read consumer-friendly information about investing, and read Investor Bulletins that can alert you to scams. The Securities and Exchange Commission's investor education line is 877-683-7841.