How to Spot Scams! – Part 2

03 Mar


To prevent from being swindled, keep the following points in mind:

Protection #1:
Avoid any investment that guarantees regular or large profits for a small outlay. Be extremely wary of companies that guarantee large profits or tout high performance over a short period of time. For instance, “We guarantee you will make at least 20-30% per month, every month from this investment.” You must remember that every investment involves risks and you must have often heard, “high risk, high return!” Be extra careful, especially if the investment is supposed to give you high returns with low or no risk.

Protection #2:
Be wary of plans that focus on paying you to recruit others instead of paying you to sell products and services. Key words that should caution you are “downline” or “pyramid”.

Protection #3:
Never sign up for an opportunity in a high-pressured situation, such as “you have a limited time to join this scheme” or “buy now or miss out”. Remember, if it is a legitimate business, it will still be around tomorrow, next week, next month or next year.

Protection #4:
It is unlikely for you to win a prize or big money if you have not entered into any contest or lottery. It is also highly unlikely for legitimate contests to ask for money in advance before paying out the prize money. If you receive a call that says you have won a prize and you need to send some money to a foreign country in order to claim the prize, just hang up. It is not worth your time and effort to entertain such calls.

Protection #5:
Be sceptical about unsolicited phone calls about investments from offshore salespersons or companies with which you are unfamiliar. If the caller says that he or she is a broker’s dealer or investment adviser licensed by an authority abroad, ask for the name of the foreign regulator by which it is licensed and check the websites of the foreign regulator which would have a list of licensed or registered persons. You must always check the credentials of a licensed person with the relevant authority before parting with your money.

Protection #6:
Be sure you get the company’s performance track record. Also ask for written information on the investment product and the business, as well as the risks involved in the investment. Read carefully the prospectus or annual report of the company before investing.

Protection #7:
Do not provide any financial or personal information before you establish that the company is legitimate.

Protection #8:
Do not be afraid to ask questions. In fact, the more questions you ask, the better. Demand an explanation for something that you do not fully understand. However, do not take everything you hear at face value but do some detective work yourself. If you need help in evaluating the investment, go to someone like your licensed dealer or investment adviser, lawyer or accountant who can give you independent and professional advice.

Protection #9:
Always check against the regulator’s websites, for example, the Securities Commission’s website for information on investors alerts, or the list of licensed intermediary companies etc.

Protection #10:
If in doubt, do not invest. Why should you risk your money if you cannot get solid information about the company, the salespersons/agents, or the investment? Remember if it sounds to good to be true, it probably is!

~ Source:

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Posted by on March 3, 2012 in Bacaan Lain


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