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Scams: What to watch for
The Washington State Attorney General’s office prepared this list of what to watch for when approached by someone offering a ‘deal.’
In this scam, the criminal contacts you with a great investment plan. While the specific details of the plan can vary depending on who is delivering the pitch, one thing is certain: it is a bad investment for everyone but the criminal.
The Opening Pitch
There are many approaches to selling investments. One example is to offer a free analysis of your investment portfolio. Others have sent out mailers offering incredible returns on such investments as gold coins, promissory notes secured by deeds of trust and even something called “viaticals,” which literally is buying the payments on a life insurance policy for someone who is about to die.
The presentations always talk about three things: your return or profit on the investment, how safe it is, and how easily you can get your money back if you need it.
The pitches often tie into something going on in the news. For instance, when there is a war or some kind of international unrest, the con criminal will exploit that to sell gold coins, saying something like, “Mr. Prospect, during periods of economic unrest, what kind of investment can you count on? You cannot count on the stock market or the financial markets. The one thing that will be there for you, no matter what, is precious metals and there is no more precious metal than good, old-fashioned gold.”
Therefore, the scammer sells you a gold coin for $3,000 that he bought for $300 and claims it will be worth $6,000 in five years.
How to Avoid It
Consider following the three C’s before you make a buying decision: compare, consider and consult:
• Compare: Whenever an investment salesperson presents an opportunity to you, before you buy, compare that investment to other opportunities from other firms. So for instance, before you invest in a money market certificate at one bank, compare the rates at two other banks.
• Consider: Never make a buying decision at the time of the sales pitch. Always give yourself time to consider whether it is a good deal.
• Consult: While you are considering the investment, consult with someone whose opinion you trust and find out what they think of the investment.