NDSU Extension Service - Ramsey County


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Top Current Scams

Top Current Scams

Frauds and scams are a continuing and growing problem for Americans of all ages.  A recent estimate put total financial fraud at a whopping $50 billion per year!  The FINRA Investor Education Foundation provides underserved Americans with the knowledge, skills and tools necessary for financial success throughout life. Established in 2003, the FINRA Foundation supports innovative research and educational projects aimed at segments of the investing public that could benefit from additional resources.  According to a recent survey commissioned by FINRA, the most common scams out there include:

E-mails from abroad: Claims of displaced royalty who need a place for their millions, orphans in need of assistance, long-lost relatives who have left who a fortune – there are a multiple of email scams out there that play on people’s emotions of looking for a quick pay-off or of aiding others.  The common theme is the individual needs your bank account information first!

'Free' lunch: Fraudsters also lure victims with invitations to free luncheons where they pitch fraudulent investments to them. They'll promise triple-digit returns or advertise investments that don't even exist, and they'll never be seen again once they get your money.

You won the lottery! - and you don’t’ remember buying a ticker: Everyone wants to believe they will win a lottery someday; but you do need to buy a ticket first. This scheme is as old as lotteries are.  To claim your prize, you need to pay a “shipping” or “handling” fee which usually involves sharing your bank account information – don’t be deceived.

Penny stocks – Be the first to purchase stock of the latest and greatest invention or claim a low, low price on precious metals such as gold.  Once the securities are artificially pumped up by advertising generated by the scammers, the scammers sell their shares and take the money, leaving the investors with nothing when the price plummets.

Cold calls: FINRA reminds us to not befriend the stranger on the phone. Scammers often cold call their victims and attempt to build friendships by not being too aggressive in their sales pitches and calling often -- pitching everything from gold coins to penny stocks to roof repair.  Often these products are not delivered, again after convincing you to share your bank account information.

"It comes down to the dangling of phantom riches -- they say, 'don't you want to double your money? Don't you want to have a nice nest egg to pass on to your heirs?' And then they say if you don't buy it now it's going to go away ... that's what is supposed to get you salivating," says Walsh.

Related: Feds crack down on scams targeting timeshare owners

Protect your Achilles' heel: Fraudsters are getting increasingly creative, latching on to whatever big theme is in the news. Some other schemes people have fallen for involve fraudsters claiming to have access to private pre-IPO shares of big companies about to go public. Oil and gas scams are also common -- where you think you're investing in an oil and gas company but the "company" doesn't even have oil and gas wells or equipment.

Walsh says you should always verify that the person pitching you financial investments or products is licensed, and never rush into anything.

"Fraudsters are experts at identifying the Achilles' heels of the people they're targeting," she said. "They push you from a logical state to an emotional state, and when you're pushed into an emotional state you want to act now and you don't want to give up opportunity."

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