BBB Tip of the Week

Millions of people fall victim to investment fraud every year. Those perpetrating fraud target those with money, which translates into the Baby Boomer generation, especially those retiring with money from a 401(k) plan and personal savings.

Investment fraud victims are not isolated, frail and gullible, as one might imagine. Studies show they are self-reliant decision makers, optimistic, college educated, open to listening to new ideas, may have experienced a recent financial setback and have above-average income and financial knowledge.

Common fraudster tactics include:

• Enticing victims with claims of too-good-to-be-true riches.

• Building credibility by claiming to be with a reputable firm or to have a special credential.

• Using the bandwagon method by stating others have already gotten rich on an investment.

• Offering a small favor in return for a big favor, such as a reduction in commission for immediate investment.

• Creating a false sense of scarcity, such as “only a few units left.”

The Better Business Bureau ( www.bbb.org/council/smart- investing/ask-and-check/) and FINRA Investor Education Foundation ( www.saveandinvest.org) offer the following advice to avoid becoming a victim of investment fraud:

• Legitimate marketers use the same tactics as fraudsters. A key difference is that legitimate investments will still be available tomorrow.

• Always be prepared to say “No.” If you imagine and practice walking away, it is easier to do so in the moment. If you are uncomfortable saying “No,” you might want to say that you never make investment decisions without consulting a particular person, such as a family member, attorney, or accountant.

• Turn the sales pitch around and ask your own questions. You might ask if the person is a licensed broker and if the investment is registered. Then take down the information, walk away and check it out using the resources below.

• Talk to someone about investment opportunities before investing.

Check on potential investments using the following resources:

For brokers or firms: www.finra.org/brokercheck

For investment advisers: www.adviserinfo.sec.gov

For registered investments: www.sec.gov/edgar.shtml

For broker-dealers, investment advisers or investments: www.nasaa.org

For insurance agents: www.naic.org

To stay up to date on scams, visit the BBB Scam Stopper webpage at www.bbb.org/scam or call (509) 455-4200.

By Erin T. Dodge, BBB editor