How to Spot a Con Artist
Updated: Aug 26, 2019
Con artists are pretty clever. They prey upon our emotions, hopes, dreams, and fears. It's important to understand that they're very good at what they do. Duping people is what they do for a living. Here are some red flags that can help you spot a con artist and avoid falling victim for an investment scam.
The seller is not licensed or registered.
You can easily check with the Office of the Indiana Secretary of State through searchable databases on the Indiana Securities Division website. Individuals and firms in the financial services industry must meet certain requirements. Taking time to research a seller and their investment offer could save you in the long run.
No written information is provided.
Ask for a prospectus. It's a legal document that provides details about an investment offering. The prospectus or "offer document" will contain the facts you need to make an informed investment decision.
The seller refuses to take no for an answer.
You should be suspicious of any seller who pressures you to "act now" or says this is a "limited time offer." If they're pushing you to make a decision immediately, it's probably because they don't want you to find out they're selling a scam.
The seller is hesitant to answer your questions.
Con artists seem to have an answer for everything, but if your questions make them uncomfortable, it's best to walk away. Ponzi schemer Bernie Madoff once said he only turned away prospective clients when they asked too many questions.
They promise high returns with low (or no) risk.
Returns and risks go up and down together. There's no such thing as a "no risk" investment. All investing comes with some risk attached.
You are asked to keep this "exclusive" offer a secret.
Con artists will do anything to avoid getting caught. They pick their victims carefully. They don't want you telling someone who might uncover the scam.
Trust your gut.
Many victims report feeling uneasy about the decisions they're making. Just know that if an offer sounds too good to be true, it is!
Learn more about our bloggers by visiting the Blog Contributors page of our website.