Actionable Strategies and Money-Saving Tips
Knowledge is your shield, and a set of practical habits can be your sword in defending against investment scams. The following strategies are your core defense plan. They are not complicated, but they are incredibly effective at stopping fraudsters in their tracks.
1. Always Verify Before You Invest
Never make an investment decision based solely on a phone call, email, or seminar. Always verify the person and the company offering the investment. Scammers often use official-sounding but fake titles and company names. Legitimate investment professionals must be registered.
Your Action Step: Use FINRA’s BrokerCheck tool, a free service to research the background and experience of financial brokers, advisers, and firms. You can also check with your state’s securities regulator to see if they have any information on the person or company. A legitimate professional will encourage you to check their credentials; a scammer will make excuses or try to rush you.
2. Question Every “Guarantee”
As we discussed, all investments carry some degree of risk. Anyone who “guarantees” a specific return on an investment is lying. The market goes up and down, and no one can predict the future with 100% certainty. The promise of a guaranteed high return is perhaps the most universal sign of senior fraud.
Your Action Step: When you hear the word “guarantee,” immediately become skeptical. Ask the promoter for detailed, written information about the investment, including the risks. Read the fine print carefully. If they are hesitant to provide this or if the documentation is vague, walk away.
3. Take Your Time and Resist Pressure
Scammers create a false sense of urgency to prevent you from thinking clearly. They want you to make an emotional, not a logical, decision. They know that if you have time to research their claims or talk to someone you trust, their scheme will fall apart.
Your Action Step: Create a personal rule: never make a financial decision on the same day you hear about it. Give yourself a cooling-off period of at least 24-48 hours. Use phrases like, “I need to review this with my financial advisor,” or “Let me think about it and I’ll call you back.” A legitimate offer will still be there tomorrow. A scammer will often become pushy or aggressive, which is your signal to hang up.
4. Protect Your Personal Information Like Gold
Never provide personal or financial information to anyone who contacts you unsolicited. This includes your Social Security number, bank account numbers, credit card numbers, or online account passwords. Scammers can use this information to steal your identity or drain your accounts directly.
Your Action Step: If someone calls or emails you asking for this information, even if they claim to be from a government agency like the IRS or Social Security Administration, it is a scam. For official information on Social Security and Medicare, visit SSA.gov and Medicare.gov. Federal tax information is at the IRS. These agencies will almost always initiate contact through official mail, not with a threatening phone call demanding personal data.
5. Consult a Trusted Third Party
Scammers often try to isolate their victims, sometimes even coaching them on what to say to family members who might ask questions. One of the most powerful things you can do is break that isolation by discussing any potential investment with someone you trust.
Your Action Step: Before you ever send money, talk to a certified financial planner, your accountant, a trusted family member, or a savvy friend. Explain the investment opportunity to them. Simply saying it out loud to someone else can often help you spot the holes in the story. This second opinion is one of the most effective financial safety tips you can practice.
6. Understand What You Are Buying
Con artists often pitch overly complex or “secret” investments that are intentionally confusing. They might use a lot of jargon to make themselves sound like experts and to make you feel like you’re not smart enough to question them. If you can’t understand it, you shouldn’t invest in it.
Your Action Step: Ask the promoter to explain the investment in simple terms. Ask: “Where is my money going?” “How does this investment make a profit?” “What are all the fees involved?” “How can I get my money out if I need it?” If you don’t get clear, simple answers, it’s a major red flag.
