No one is completely safe from scams. However, when you use care, you can reduce your chances of becoming a victim. The following are some red flags of fraud:
- You're promised high returns at no risk. A security with a high potential return is seldom free of risk.
- You're contacted by someone you don't know. Legitimate investments and advisors don't approach strangers for money.
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You're asked to keep the matter secret and to act fast, because this is a "once in a lifetime" opportunity.
- You're asked to sign forms or proxies in advance.
- You're being subjected to pressure sales tactics and attempts are made to make you feel guilty if you hesitate to invest.
- You're told your securities could be resold or exchanged above their market value provided you pay fees in advance.
- Financial transactions are carried out without your consent.
- You're told that a regulatory agency has "approved" an investment. Regulatory organizations never give an opinion on the quality of an investment.