BBB Says: Investigate Before Investing
Anchorage, Alaska – Investors, be wary: Don’t put stock in brokers and agents with too-good-to-be-true promises, advises Better Business Bureau. The Financial Industry Regulatory Authority —FINRA—shares the common psychological tactics used by investment frauds:
The "Phantom Riches" Tactic: Sellers dangle the prospect of wealth and high-returns. "These gas wells are guaranteed to produce $6,800 a month in income."
The "Source Credibility" Tactic: Solicitors claim to have clout or special credentials at reputable firms. "Believe me, as a senior vice president of XYZ Firm, I would never sell an investment that doesn't produce."
The "Social Consensus" Tactic: Brokers use names of savvy investors and other sources to insinuate that "everyone" is investing. "This is how ___ got his start. I know it's a lot of money, but I'm in—and so is my mom and half her church—and it's worth every dime."
The "Reciprocity" Tactic: Agents offer small favors in return for big favors. "I'll give you a break on my commission if you buy now—half off."
The "Scarcity" Tactic: Advisers spread rumors of false urgency and limited supply. "There are only two units left, so I'd sign today if I were you."
BBB serving Alaska, Oregon and Western Washington says: "Investigate before investing."
Before working with brokers or other financial salespeople, ensure that they are licensed to sell investments; check registration with FINRA, the U.S. Securities and Exchange Commission—SEC—and the Alaska Department of Commerce, Community and Economic Development Division of Banking and Securities—DCCEC. Immediately report problems if they arise.
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