February 23, 2016

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How to Help Keep Your Customers’ Money Safe with Tips for Avoiding Popular Investment Scams

When there’s a downturn in the stock market, investors will get worried, but scammers see tremendous opportunity to “scam.” . Whenever there’s uncertainty in the market, people – like your customers – tend to look for safe havens — and that’s when criminals go into high gear.

Using phone calls, emails, and letters, scammers drum up all types of questionable schemes that promise high returns and low risk. In order to further protect your identity of your customers, there are important scams that you may want to educate them on:

  • Good old gold: When your customers are thinking about a surefire way to turn their money into a good investment, gold is often seen as a particularly bright option. But setting aside numerous arguments from economists about why these investments aren’t ideal, the biggest risk to your customers is that they could be paying for nothing (or at least less than their money’s worth). There are many gold scams, and they tend to get pushed more during market downturns. One classic is the “bait and switch” investment scam, in which a company lures your customers in by promising a certain type of gold product, but then switches things up by delivering another, less valuable item.
  • Bulletin boards: There are hundreds of online forums where people rant and rave about their investment options, and some of the larger ones have thousands of messages posted hourly. While your customers may find some valid insights, investment scammers also use these boards to lure others into questionable schemes. They may claim to reveal insider information about new products or big contracts, or spread negative rumors about certain companies. Per Investopedia, it’s nearly impossible to sort out the valuable posts from the fake ones.
  • Crowdfunding: Started as a way to facilitate donations for creative professionals and nonprofits, crowdfunding has evolved into a tool for smaller businesses to get investment capital. Your customers can easily invest through an online “funding portal” and select several projects at once. But the Office of the Indiana Secretary of State notes that investors must be extremely cautious about these investments. Some may be scams, while others may simply be run by people who aren’t allowed to seek investments. Either way, your customers could lose money on the deal.

Help Your Customers “Scam-Proof “ Themselves

It’s not always easy to spot scammers. After all, some may be charming or persuasive enough to make your customers think that their claims could be legitimate. Here are some tips you can share with your customers on how they can protect themselves:

  • Talk in-person with an investment advisor who can give them insight on the effects of rebalancing their portfolio or changing their long-term goals. Market volatility is part of investing in the stock market, so it’s important to consider investment objectives and find a trusted advisor.
  • Thoroughly research any company or individual offering an investment opportunity. Often, your customers can contact their state’s securities division to get more information or hear about recent scams. If they think they’ve been affected by a scam, they can file a complaint with the Securities and Exchange Commission.
  • Much like any kind of identity theft prevention, be very cautious when giving out personal or financial information, especially to people who have contacted them out of the blue.

Navigating the stock market’s volatility is rarely easy. Fortunately, by keeping up with the latest fraud efforts, and sharing best practices with your customers through regular communication, you can help them avoid costly investment scams and safeguard their money.

David Rabinovitz

Identity Protection Consultant at IdentityForce
David is aligned closely with c-level principals and provides them with coaching services focused on strategy, finance, ownership, deal structuring, and shareholder relationships, which led him to join one of his high-growth clients as their CFO. As a high-energy executive with a wealth of experience, David is a versatile corporate “fireman” who skills are often sought after to assess and resolve complex business challenges, as he brings critical insight for business leaders in transition.He is also a long-standing Special Crew Volunteer for Pan-Mass Challenge, an annual cycling fundraiser that strives to provide Dana-Farber's doctors and researchers the necessary resources to discover cures for all types of cancer.

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