Scam Artists use investment seminars and pretend to be financial planners who offer appealing and fanciful investment advice to the unsuspecting investor. Many of their advice may require them be licensed or registered. They are not required to disclose conflicts of interest and may be able to charge hidden fees and commissions. Investors may not be aware of the hidden costs and fake investments until it's too late.
Annuities
A contract drafted by a life insurance company that guarantees a continuous income for a specified length of time. The payments are typically made on an annual basis or in regular instalments, usually in cases to augment retirement income. Investors are frequently enticed to purchase annuities that are unsuitable, misguided and not appropriate for their circumstances. Annuities are an important way to protect your finances for those who are elderly. But, they can also be dangers due to the incorrect and unwise advice that is often provided.
Illicit securities are offered as an individual retirement accounts (IRA) investment options
Unscrupulous self-directed IRA custodians are offering the possibility of holding fraudulent and illegal securities within IRA accounts. If the illegal or fraudulent nature of the securities become clear, investors may not just lose all of their investments, but also be faced with further IRS and administrative penalties as well. A lot of investors think that simply because the investment is kept within an IRA account, it's legal and safe. Investors need to be sure that the investment has been properly registered and sold by a licensed salesperson.
"Callable" CD's
These higher-yielding deposits won't expire until the time the bank redeems
them or calls them. Huge losses as much as 25% could be the result of early
redemption of the CD. Callable CD sellers often don't adequately disclose such
risks and other restrictions to investors.
Promissory notes
Investors are often enticed by promisory notes scams that promise big returns at minimal risk. They are typically sold by independent insurance companies. A majority of these notes are short-term debt instruments issued by a fraudulent company or an institution that doesn't exist. Each one promises high returns upwards of 15% per month with minimal or no risk. Typically, they come with an expiration date of 9 months.
Predatory credit
Predatory lending is different home mortgage lending practices where predatory lenders will pressure consumers into signing loan agreements which are not in the consumers best interest or that they cannot afford. The private placement program scam person who is performing the act may employ a combination of deceptive sales tactics and false promises to convince the borrowers to sign a contract before they have a full understanding of the contract.
Prime Bank Schemes
Scam artists claim that investors will earn triple-digit gains by granting access to the investment portfolios of the top banks in the world. People who fall for these scams often target conspiracy theorists, promising access to "secret" investment strategies used.
Internet Fraud
Scammers are enthralled by the wide-ranging reach of the Internet and the assumption of anonymity. Scammers make use of the Internet to advertise fake "prime banks" investment opportunities, and to increase the sales of stocks that are not traded. The Attorney General warns investors to ignore anonymous financial advice on the Internet in the form of e-mails or ads.
Affinity Group Fraud
It happens when private placement program scam artists make use of their victims' ethnic or religious identity to gain their trust, knowing that humans are inclined to trust those who share similar beliefs. Advertising in the media that serves certain ethnic groups is employed to identify potential victims, usually with promises of work, education or financial advice. The scheme is often propagated through the word of mouth.
Ponzi/Pyramid Schemes
Ponzi schemes are scams that pay high returns to investors from funds received from later investors. Investors end up losing their entire capital when the building of cards collapses. A pyramid scheme is the collection of money from people at the bottom (new investors) to pay the initial investors who are at the top and the focus is on bringing in new members/investors instead of selling the service or product.
