Investing is generally a better idea than sitting on your money. With the constant inflation we face, saving money doesn’t make as much sense as it used to. If your money isn’t making more money, it’s losing money, as its purchasing power will most likely decrease over time.
Many entrepreneurs have found success with various investing techniques. Some build their entire business around it while others simply use the practice to enhance their company profits.
Still, investing has its risks. Unfortunately, the risks are sometimes due to scammers. People use your lack of knowledge to trick you out of your money.
Before you stake your business success in any investment tactic, there are a few things you need to know.
In an effort to reduce the amount of investment scams, the North American Securities Administrators Association (NASAA) releases an annual top investor’s threat list. You should familiarize yourself with this list in order to make your entrepreneurial venture successful.
Persistent Investor Threats
Persistent investor threats include threats that have been ongoing for some time. These tricks have been used successfully by scammers in the past, and they continue to be used today. They include:
- Private Offerings
- Real Estate Investment Schemes
- High-Yield Investment & Ponzi Schemes
- Affinity Fraud
- Scam Artists Using Self-Directed IRAs to Mask Fraud
- Risky Oil & Gas Drilling Programs
If you find yourself involved in any investment opportunities that match this list, your best bet is to back out. Remember that these scams have been run for some time, so some of the people using them will be quite experienced.
New Investor Threats
New investor threats are scams that have popped up more recently. These haven’t been used extensively in the past, but their popularity is growing. This year’s list includes:
- Proxy Trading Accounts
- Digital Currency
Proxy Trading Accounts
What you need to watch out for here is someone who wants to run an account for you, without providing you with proof that they are licensed to do so. Without a license, there is nothing to stop them from scamming you. Unlicensed people will not face the same consequences for acting in an unethical manner with your money.
Licensed individuals, however, have to hold themselves to a higher standard. It takes a lot of work for them to get the proper registration, and they face serious consequences if they act out of line.
You need to get the proper documentation before allowing anyone access to, let alone control over, your account. Even then, it’s not a bad idea to do some extra research and make sure there have been no issues with this individual in the past. Outsourcing various business tasks is a great idea – but be careful of who you trust.
Digital Currency
Digital currency is growing in popularity. People are now able to purchase goods and services with digital currency. Bitcoin is one of the most popular forms, but there are many others like it.
You need to understand that this form of currency carries many risks. There is nothing to back this currency, meaning its value can fluctuate wildly. It’s also not attached to any government, which makes it difficult, if not impossible, to regulate in any reliable manner.
Digital currency uses very complicated mathematics to determine its value. Even seasoned economists have trouble understanding it. That’s exactly why scammers love it. When people don’t understand something, it’s much easier to lie to them about it.
As a new business owner, you have enough to worry about. Educating yourself about digital currency isn’t usually worth the effort – or associated risk.
Keep Informed
Whether the scam is a persistent threat or it is a new one, you won’t be happy if you catch yourself in the midst of one. Depending on the success of your business before you fall victim to an investment scam, there is a good chance your budding career won’t survive. Looking for scams on this list will go a long way towards helping you stay safe while searching for legitimate investment opportunities.
Mike Halverson works for eConsumerServices, a fraud protection and scam identification organization. He helps both businesses and consumers steer clear of credit card scams, internet fraud and much more.
Marty Huggins
