If an Investment Ad Makes These Promises, Run the Other Way

Photo (cc) by Don Hankins

If you have never won a foreign lottery or otherwise been promised a large sum of money, you’re in a slim minority.

More than 8 in 10 Americans have been solicited with potentially fraudulent offers that start with promises of money, according to a report from the FINRA Investor Education Foundation. And 11 percent of us have lost a “significant amount of money” after falling for one.

The study found that we’re often terrible about spotting red flags — those dollar signs can be hard to see past. When it comes to investments, here are some of the statements FINRA says you should be wary of:

  • This stock has outperformed the Dow Jones Industrial Average each year for the last 5 years.
  • The lowest return you could possibly get on this investment is 50 percent annually, but most investors are making upwards of 110 percent a year.
  • There is no way to lose on this investment – it is fully guaranteed.
  • This investment is for a company with excellent management and in a high growth industry.
  • This investment made hundreds of people extremely wealthy.
  • This is an opportunity to get in on the ground floor of a company that is about to roll out a revolutionary new technology.

Of course, it’s possible some of these claims could be true, but when you encounter statements like these, your fraud radar should shift into high gear.

How can you tell? The Better Business Bureau offers some tips, and we explain how to avoid some of the top consumer complaints in the video below:

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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