High Pressure Sales Tactics
Beware of sales pitches, whether from individuals or in ads, that urge you to get in on the ground floor or to act at once. Avoid being pressured to make a quick purchase at a “low, low price,” to buy now because “tomorrow will be too late,” or overreact to being told “don’t be a fool,” or “when this becomes public knowledge people will be lined up to take advantage of this golden opportunity.” Shady promoters may even offer to have an express delivery service pick up your check. They don't want you to take time to think, read the small print, or talk to others.
Promises of Exorbitant Profits
No honest investment or business is built on quick, astronomical profits. If it sounds too good to be true, it probably is.
Claims of No Risk or Minimal Risk
Return on investment is guaranteed. Assurances that “you can’t go wrong” are a sure tip that you are being conned.
Not Answering Questions or Allowing You to Ask Questions
Con artists don’t want you to ask questions. Instead, they will answer by asking you questions. These are usually ones intended to get a positive response. “You would like to make more money, wouldn’t you?” Reputable investment professionals encourage you to ask questions. Con artists don’t want you to.
Evasive Answers and Lack of Communication
A promoter’s failure to provide details and a disclosure document or to respond directly to inquiries should diminish your enthusiasm. He or she is probably hiding something.
Claims that the Investment Doesn’t Have to be Registered
Most investments available to the general public must be registered with the Securities Division of the Washington State Department of Financial Institutions.
Avoid Any Investment that isn't Clearly Described in Detail, Without Hedging
Swindlers often declare that the specifics are “too technical” to describe in layman’s terms or that the information is “classified” or “confidential.” Don’t buy it. A prospectus must accompany all investments. If it is that complicated, you probably don’t want to be involved.
Unprofessional Businesslike Conduct
They refuse to return phone calls, answer correspondence, or give out their phone number and physical address. Callers can only get an answering machine. They always want to meet you someplace other than their offices. These are all warning signs of fraud. There are, however, con artists who have fancy offices, cars, and professional receptionists. If they weren’t slick, they wouldn’t stay in business very long.
Promises of Inside Information
Never buy on the basis of rumors or hot tips. And acting on insider information is illegal and could land you in lots of trouble. Always rely on fact rather than emotion. If the urge gets too strong, call your broker and ask for a research paper on the security you have in mind.
