Consumer Publications List

Keeping Your Savings Safe from Con Artists

In only a few minutes, an unscrupulous con artist or fast talking 'financial advisor' can swindle an unsuspecting consumer out of a nest egg that took a lifetime to build. Unlike muggers and thieves, investment fraud artists don't take your money against your will; they persuade you to hand it over willingly.

Here's how one convicted con man describes the way he targeted senior citizens: "...The key is to become friends with the victim first. I always talked to someone several times before ever asking for a sale. I asked them about their life, listened to their stories, kept them company, flattered them. 'Edie, you couldn't possibly be 75 years young. Why my wife is only 35 and you sound just like she does over the phone!' Once they were my friends and trusted me, I could sell them until they ran out of money..."

You don't have to be rich to capture the attention of a con artist. Many of their prime targets are older consumers with little or no experience investing money.

Don't Be a Target

The most common way for swindlers to victimize investors is through unsolicited telephone calls. You can reduce the likelihood of falling victim by refusing to talk with unsolicited callers, no matter how honest and reputable they sound. Should you receive a call from someone you don't know, be very cautious and don't reveal any personal or financial information.

Salespersons who use high-pressure tactics to force you into making a decision on the spot are almost always pitching frauds. They're afraid you might figure out the scam if you think over the investment, consult with your family or seek a professional's advice. They may try to convince you that you'll lose a lot of money if you hesitate and don't "'get in" right away.

Don't be pressured into making a quick decision. Use your own transportation to any meeting that's arranged, rather than depend upon the salesperson's. That way you can leave whenever you want. Leave your checkbook and credit cards at home.

Swindlers often like to develop a false bond of friendship.They may offer gifts or unsolicited financial advice to gain your trust. Never feel pressured to invest out of courtesy. You're under no obligation to stay on the phone or remain at a meeting with promoters, no matter how much time and effort they've taken to persuade you to make an investment.

Suspicious Sales Pitches

Beware of any promoter whose investment presentation:

• Preys on fear. Con artists know senior citizens often worry about out living their savings or experiencing a catastrophic event that could wipe out savings. They may say the investment is a way to build up so much savings you won't have to worry.

• Promises great return on your investment at little or no risk. Remember, the higher the return, the greater the risk.

• Involves the latest trend. Be skeptical of promises of instant profits, as in pyramid schemes, where you must enlist others. Other recent frauds involve investments in wireless cable or telecommunications licenses or stations, so-called 'prime bank instruments,' precious metals and mines, international deals, and gas and oil drilling ventures.

• Pushes you to invest money in a plan you don't understand.

• Offers testimonials you have no way to check out.

If You're Considering Investing

Get everything in writing, review it thoroughly, and make sure you understand all the risks. Walk away from any promoter who won't give you references and information in writing.

Just because the promoter has glossy, complicated-looking brochures does not mean the operation is legitimate. To find out, you must check out the company. A financial expert not connected with the seller should look over the information, give an unbiased opinion and explain the investment to you.

Confirm that the promoter is registered and in good standing. The Maryland Securities Division (410-576-7784) maintains and has access to databases with this information. Many investment opportunities must be registered in Maryland before sale, and investment promoters must be licensed.

The National Association of Securities Dealers (800-289-9999) can also provide information on brokers and financial advisers.

After You Invest

Stay in charge of your money. Be suspicious of any planner who says,"leave everything to me." Instead, insist on regular statements and monitor the activity on your account. Ask lots of questions about activity on your account that looks excessive or unauthorized. If the promoter makes excuses or stalls when you demand your money, you may be dealing with a swindler.

If you suspect something's amiss with your investment and cannot resolve your concerns, demand your money and call the Securities Division immediately. Don't let embarrassment or fear keep you from reporting fraud. The longer you wait, the harder it is for the authorities to track down a con artist.

Con artists understand the panic you feel after a financial loss. It's the ideal time for them to approach you again, promising a 'sure' way to recover your lost money. Don't fall victim twice. For more information on avoiding investment fraud, write: Securities Division, Attorney General's Office, 200 St. Paul Place, 20th floor, Baltimore, MD 21202.