I have noticed so many nasty yet arrogant reactions from netizens against people who either have been recruited by pyramid schemers or are the proponents of the scams themselves.
Most of them are seasoned investors/traders or have been “financially-educated” by financial literacy seminars and Facebook forums. It is as if they are no longer vulnerable to these schemes and fraudsters.
I may sound now like I’m attacking the wrong persons. Do not misjudge me.
I am writing this to let you know that I have close friends who are supporters of the financial literacy awareness campaigns but have become victims of scammers while being an advocate. One was a victim of a managed forex broker and another by a “promising MLM” company.
It’s just so ironic that a few of them were once heavy critics of the scams that they eventually entered in. And lost money in the process.
According to a FINRA (Financial Industry Regulatory Authority) Foundation survey back in 2007, almost anyone who invests is a potential fraud target, though you can reduce your vulnerability if you know what to guard against. That survey examined how known investment scam victims differed from non-victims. Among its key findings, the survey identified several investment fraud risk factors, including:
Owning high-risk investments, including penny stocks, promissory notes, futures, options or private investments in foreign currency;
Relying on friends, family, co-workers, and even Facebook group “personalities” for financial advice (in that survey done in the US, about 70 percent of the victims made an investment based primarily on advice from relative or friend);
Being open to new investment information (the survey said that three times as many victims went to a free investment seminar than the national sample);
Failing to check the background of an investment or investment professional (for example, one in eight victims failed to check whether an investment professional had a criminal background, and one in seven did not check their licensing or registration); and
Inability to spot persuasion tactics used by fraudsters.
How To Protect Yourself from Scammers
Aside from watching out red flags of fraud and learning how to identify and avoid the persuasion tactics scammers use, it is very important and critical that you ask questions about investments and the people who sell them. Here are two short recommendations:
1) Investigate the Background of the Investment Broker or Distributor — Never be shy by asking the investment broker or seller whether what they are promoting is licensed to sell that investment and ask for a proof that they are registered with the SEC, the BIR or even at DTI. If an individual broker, make sure that he is registered and certified by SEC or the Insurance Commission (if he is an insurance agent, aka financial advisor).
2) Investigate the Investments — Ask whether the investment vehicle is registered and, if so, with which regulator. Most investors will want to buy securities products that are registered with the SEC or the BSP or other government regulators. You must remember that companies must be registered first with the SEC before they can sell securities to the public.
I hope you will do your assignment first by re-reading this article before jumping to any kind of “investment” soon.
Be scam-free, you educated financial literacy advocate!
Know how to protect yourself from scammers and fraudsters by subscribing to BurnGutierrez.Com for FREE.
Rock your way to abundance!
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