financial scams

Big Promises = Bigger Losses

If you’re looking to shore up your retirement fund, don’t fall prey to investment scams that promise instant money or lofty rates of return. Scammers often lurk behind these offers. Ponzi schemes are one form of investment fraud. How does this scam work?

1. Returns are paid to investors with money raised from earlier investors instead of from profits earned by the company doing business.
2. Returns are only paid after all the company’s operating costs are deducted.
3. Returns are paid whenever the company receives a large government grant.

“A” is correct. Sadly, the scammers who set up the Ponzi scheme are often the only ones who see a real profit. Also avoid groups that advertise “risk-free” guarantees, who charge high upfront fees or sales commissions, or who penalize you if you withdraw funds early. Walk away from those who don’t have a valid securities license, sell unregistered investment products, or who pressure you to buy promissory notes.