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Telltale Signs of Fraud

Posted by SmartCheck Staff / September 27, 2017
Telltale Signs of Fraud

As SmartCheck Month and World Investor Week (WIW) get underway, we're sharing tips, ideas, and questions to empower investors to make informed investment decisions. No matter what your investment strategy is, identifying and avoiding fraud is an essential key to success.

Here are some red flags to look for when considering an investment or trading opportunity that involve futures or options on futures:

  • Superficial Signs of Legitimacy Online...: Fraudsters may go to great lengths to appear legitimate. For example, unregistered binary options or forex platform operators may present themselves as well-established companies by developing polished websites, promoting themselves through online ads, creating apps for smartphones and other devices, and establishing a strong social media presence. But in reality, they may not even have a physical presence in the U.S.

  • …And Offline: Some fraudsters go to great lengths to establish an impressive offline presence as well. For example, Hunter Wise Commodities’ fraudulent precious metals investment operation included a sales staff, storage facility, partner brokerages, faked statements and company brochures. It looked like an impressive operation, but in reality, there was never any gold, silver, platinum, palladium, or copper at all. Don’t rely on these superficial signs as proof of legitimacy.

  • Urgency: Think twice any time you’re told that an offer is available for a limited time or that a limited number of people will be allowed to invest. Pressuring you to rush into a decision is a classic tactic used by fraud perpetrators. They want you to hand over your money before you have time to research the trade—or them.

  • Promising Huge Returns: If an offer sounds too good to be true, it probably is. Financial trades that offer the chance of significant returns all come with risk. Anyone who guarantees a profit on a trade involving futures or options on futures shouldn’t be entrusted with your money.

  • Offering a "Favor": Con operators often create the illusion of friendship by offering—or even providing—a small favor in return for your agreement to invest with them. For example, they may claim they’re waiving the commission for your first trade or extending a deadline “just for you.” Legitimate financial professionals conduct business in a straightforward way; they don’t pretend to provide some clients special treatment out of friendship.

  • Aggressive Sales Tactics: Likewise, legitimate financial professionals don’t pressure their clients with frequent phone calls, texts or threats that you’re “making a big mistake.” If they can’t take “no” for an answer, walk away.

  • Confusing Explanations: Fraudsters may intentionally use unfamiliar jargon or complex explanations to cloud the risks of an offer. Take the time to ask questions and dig into details, to be sure you understand the opportunity.

Keep an eye out for these telltale signs and share them with family and friends. But even if you don’t spot clear signs of fraud, always ask for detailed written information on any opportunity and run a background check to ensure the firm or financial professional is registered.