With a tough economy making timely retirement less likely for many folks, retirement-related financial scams may be on the upswing. According to a new guide from the Securities and Exchange Commission, here are five common tactics that crooks use to sign retirement-minded victims to bogus accounts:
- Phantom Riches A scammer may dangle the prospect of wealth, enticing you with something you want but can’t have, and then promise something like this: “These gas wells are guaranteed to produce $6,800 a month in income.” If it sounds too good to be true it probably is; any guarantee of investment gain should be viewed skeptically.
- Expert Credentials A scammer might build credibility by claiming to be a reputable expert. “Believe me, as a senior vice president of XYZ Firm, I would never sell an investment that doesn’t produce.” Check out the firm at Broker Check. It may sound blue chip but have offices no closer than The Isle of Man.
- Everyone is doing it Anytime a financial sales person tells you that Warren Buffett and Peter Lynch have bought into the investment along with his own mother and half his church — run. If the investment doesn’t make sense on its merits, don’t be fooled into thinking a bunch of smart and connected people have already vetted it and forked over their cash.
- Tit-for-tat A scammer might offer to do a small favor in return for a big favor. “I’ll give you a break on my commission if you buy now—half off.” Inducements are always a red flag.
- Only a few left Be on the lookout for anyone creating a false sense of urgency by claiming limited supply. “There are only two units left, so I’d sign today if I were you.” Reality is usually the other way around. If it’s a truly scarce sure thing, you won’t get the call. Sorry, those are the deals that brokers save for Warren Buffett and their own mother.