How to Protect Yourself From Investment Scams

With the stock market breaking record numbers these days, the time is right for con artists and scammers to take advantage of new investors. Beware.

Instructions

Difficulty: Moderate

1. Ignore unsolicited e-mails and Internet chat-room messages that urge you to buy a particular stock now. A con artist may be pumping up the stock price before dumping shares.
2. Avoid buying from sales people who promise high returns, demand an immediate response or press for personal financial information.
3. Ask for a prospectus and other written information before you agree to buy stocks.
4. Beware the Ponzi scheme. Early investors in such scams are repaid with money from later investors, who ultimately lose their money.
5. Watch out for multilevel marketing scams. In these scams, distributors or sales agents make fees for recruiting other distributors or agents, who pay fees for their jobs.
6. Know what you are buying. If you don't know much about oil and gas wells, for instance, research the industry and particular companies in it before you invest.
7. Be careful when buying stocks in companies that you haven't read about in respected publications and whose stocks aren't listed on major exchanges.

Tips & Warnings

• To report Internet investment scams, contact the Securities and Exchange Commission at [e-mail].
• Don't give your date of birth, Social Security number, mother's maiden name or other personal information to sales people you don't know. They might be trying to set up a fraudulent credit-card account in your name.