Skip to main content

Cookies on BBB.org

We use cookies to give users the best content and online experience. By clicking “Accept All Cookies”, you agree to allow us to use all cookies. Visit our Privacy Policy to learn more.

Cookie Preferences

Many websites use cookies or similar tools to store information on your browser or device. We use cookies on BBB websites to remember your preferences, improve website performance and enhance user experience, and to recommend content we believe will be most relevant to you. Most cookies collect anonymous information such as how users arrive at and use the website. Some cookies are necessary to allow the website to function properly, but you may choose to not allow other types of cookies below.

Necessary Cookies

What are necessary cookies?
These cookies are necessary for the site to function and cannot be switched off in our systems. They are usually only set in response to actions made by you that amount to a request for services, such as setting your privacy preferences, logging in or filling in forms. You can set your browser to block or alert you about these cookies, but some parts of the site will not work. These cookies do not store any personally identifiable information.

Necessary cookies must always be enabled.

Functional Cookies

What are functional cookies?
These cookies enable the site to provide enhanced functionality and personalization. They may be set by us or by third party providers whose services we have added to our pages. If you do not allow these cookies, some or all of these services may not function properly.

Performance Cookies

What are performance cookies?
These cookies allow us to count visits and traffic sources so we can measure and improve the performance of our site. They help us to know which pages are the most and least popular and see how visitors move around the site. All information these cookies collect is aggregated and therefore anonymous. If you do not allow these cookies we will not know when you have visited our site, and will not be able to monitor its performance.

Marketing Cookies

What are marketing cookies?
These cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant content on other sites. They do not store personal information directly, but are based on uniquely identifying your browser or device. If you do not allow these cookies, you will experience less targeted advertising.
      Country
          Country
          Latest News

          BBB Tip: Investment Scams

          By Better Business Bureau. February 27, 2020.

          (Getty)


          Investment scams take many forms, but all prey on the desire to make money without much risk or initial funding. They are often complex cons involving detailed stories. It can sometimes take years to realize you’ve been scammed. Even savvy investors fall for investment scams. Con artists are masters of persuasion, and they often learn the weaknesses of their targets and tailor their pitches accordingly.

          How the Scam Works:

          In the most basic version of the con, the scammer convinces you to “invest” in a project, company, loan, or other initiative. You may even receive regular reports that the project is producing great returns. But when you try to withdraw your money, it turns out the investment never existed.

          Another common investment con is a pyramid scheme or Ponzi scheme. You buy into a company where the profit doesn’t depend on the sale of the product, but on bringing in new investors. It’s mathematically impossible for these set-ups to continue indefinitely. Eventually the pyramid collapses.

          Tips to Spot This Scam:

          • Be very wary of buzz words. Certain phrases should raise a red flag for an investment opportunity. Don’t believe anything that is “guaranteed” to do well, or that offers low or no risk with a high return. Pyramid schemes (even if they are not called that) require you to bring in other investors in order to recoup your initial investment.
          • The investment industry is highly regulated. Be wary if investments are unregistered with the SEC or other investment industry regulators. Also, check licensing for the sellers. 
          • High-pressure sales tactics are also a big warning sign. Many risky investments are sold at “opportunity meetings” or other high-pressure situations. A similar tactic is the use of a “shill,” a decoy who offers a fictional success story but is really being paid by the promoter of the plan. Some pitches leverage a shared connection such as the same ethnicity, church, profession, etc. Be on the lookout for attempts to prey on an affinity. 
          • How do you make money? If you find that the reward for recruiting new distributors and selling them products and training materials is more than the reward for selling products, you may be dealing with a pyramid scheme. 
          • Chain letters are also illegal. A chain letter may seem like harmless fun. Is sending $5 (or a book or small gift) with the hope of receiving the same from other participants that big a risk? It may not seem like a big deal, but any chain letter that has you sending money or other items of value through the mail with a promise of a return on this “investment” is illegal in the United States and Canada. Also, if you participate in email chain letters, you could be spreading a virus or other malware to all the people you are emailing. 

           

          For more information, check out “Fighting Financial Fraud” from BBB Institute for Marketplace Trust and FINRA, the Financial Industry Regulatory Authority.

          To report a scam, go to BBB Scam Tracker.

          To learn how to protect yourself, go to 10 Steps to Avoid Scams.