A new survey reveals 80 percent of people have been targeted by investment scammers. If that surprises you, then I've got some oil riches you can help me launder out of Nigeria. But what IS shocking, is that in that same poll, 40 percent of respondents couldn't spot the CLASSIC red flags of a financial con. The poll was conducted by FINRA, the group that regulates investment brokers.
The poll also unearthed another interesting stat: Only 4 percent of those surveyed would 'fess up and admit that they once fell for a financial fraud. The FINRA Foundation estimates that more than half of financial fraud goes unreported to authorities.
"Our survey reveals that there are a variety of reasons many people may be unwilling to report being the victim of financial fraud," said FINRA Foundation President Gerri Walsh. "Some respondents said that they didn't know where to turn, while others said they didn't think reporting it would make a difference --or that they were too embarrassed."
So now, so you don't have to be embarrasssed --in the privacy of your own home, and the comfort of your jammies and fuzzy slippers-- I bring you the highlights of the FINRA Investor Education Foundation's survey, so you can test yourself before the bad guys do.
Here is my financial fraud mini quiz. (Answers on the last page.)
Financial Fraud QUIZ:
1. Fully Guaranteed. True or False: You should give priority to investments advertised as fully guaranteed, to avoid losing money in these tricky financial times.
2. Free Seminars. True or False: If you receive an invitation to a free educational seminar on investing, you're likely to get unbiased information because the seminar is free.
3. Recruiting Commission. True or False: A good investment is even better if you can make a little extra money in the form of a commission for recruiting other investors.
4. 110% Return An annual return of 110% on an investment is a solid performance that anyone would be pleased to have in their portfolio. True or False?
5. Foreign Fees. Sometimes it's necessary to make an initial deposit or pay an entry fee in order to participate in a lucrative foreign investment opportunity. True or False?
6. Foreign Lotteries. If you receive a cashier's check as your first payment for winning a foreign lottery, you should cash it and celebrate!
ANSWERS:
1. Fully Guaranteed. True or False: You should give priority to investments advertised as fully guaranteed, to avoid losing money in these tricky financial times.
False. No investment is guaranteed, but fraudsters often claim they are in order to get people to invest.
2. Free Seminars. True or False: If you receive an invitation to a free educational seminar on investing, you're likely to get unbiased information because the seminar is free.
False. "Free seminars" about investing are either offered by brokers hoping to generate new clients or by scammers offering fraudulent investment opportunities.
3. Recruiting Commission. True or False: A good investment is even better if you can make extra money in the form of a commission for recruiting other investors.
False. If you are asked to recruit other investors tread very carefully. That's the very definition of a pyramid scheme and not only could you lose money, you could be breaking the law.
4. 110% Return. An annual return of 110% on an investment is a solid performance that anyone would be pleased to have in their portfolio. True or False?
True AND False! Yes, investments sometimes double in value in just a year, but it's extremely rare and, of course, unknowable in advance. So if somebody is hyping that an investment will definitely more than double, that's your tipoff to a ripoff.
5. Foreign Investment Fees. Sometimes it's necessary to make an initial deposit or pay an entry fee in order to participate in a lucrative foreign investment opportunity. True or False?
False. If you receive an email from overseas asking you to pay money to make money, forget it. It's a scam. Yes, it is possible to invest in good foreign companies, but you should do it through a legitimate, licensed U.S. investment professional.
6. Foreign Lotteries. If you receive a cashier's check as your first payment for winning a foreign lottery, you should cash it and celebrate!
False. It's a scam. If you haven't entered a lottery you haven't won one. And it's actually illegal to play foreign lotteries across state lines.
For more investment education --that really IS free-- you can read the FINRA Investor Education Foundation's full report here.