Signs of Fraud
The best way to protect yourself against fraud is to stay informed. Be aware of the tactics scammers use to lure you into making questionable investing decisions. Watch for the following in the sales pitches:
- High rate of return or guarantee - verify the firm or individual's track record, don't invest unless you can get solid information about the investment and the company.
- Limited time offers or high-pressure sales tactics – don't be pushed into a quick decision. Be suspicious if they demand an immediate commitment or if they ask you to expedite payment, regardless of the method (cash, money transfer, credit card, etc.).
- Little or no risk – except for obligations of the U.S. government, all investments have a degree of risk. Futures contracts are leveraged or margined; you may be liable for losses in excess of your initial deposit. Ask for a written risk disclosure statement.
- Exploiting friendship or trust – check it out with someone whose financial advice you can trust; don't fall for claims that others you know have already invested.
- Exclusive offers, limited supply, special discounts or favors – avoid any offers available just for certain people or claims of urgency due to limited availability.
- Claims of "Interbank Market" trading – avoid companies that offer to trade foreign currency for you in the interbank market, a network of large companies and banks.
- Aggressive sales approach – not taking "no" for an answer, repeated phone calls, threats, urging you to take advantage of a particular trend or event in the market.
- Special credentials, claims of credibility – beware of individuals claiming they have special experience or claiming credibility based on where they work. For example, "Believe me, as a senior vice president of EZY Money Inc., I would never sell an investment that doesn't produce."
Avoid becoming a victim:
- Ask for written materials – legitimate firms will not have a problem providing written information.
- Beware of get-rich-quick schemes – if it sounds too good to be true, it probably is. Be particularly vigilant if you recently retired or came into money and are looking for a safe investment.
- Avoid unsolicited telephone calls about investing – be skeptical if someone you don't know calls you about investment opportunities. Even if they may claim that they obtained your name from a list.
- Check out the company or organization – ask what state or federal agencies the firm is regulated by and with whom it is registered. Verify using Verify the answers.
- Ask what recourse you have if you're not satisfied – get any warranty or refund provision in writing.
- Beware of testimonials you can't verify – check the legitimacy of an enterprise and all references.
- Beware of fake websites – do your research and verify with the agency or organization that has regulatory authority over the type of investment you are considering.
Report Suspicious Activity
To report possible violations of commodity trading laws: