Outsmarting Investment Fraud

Frequently Asked Questions

Assembled by:
Bill Carrigan
Securities Examiner & Investor Education Coordinator
Vermont Securities Division
BISHCA (Department of Banking, Insurance, Securities and Health Care Administration)

Investment fraud occurs more frequently than you may think. And when it happens, it can have a devastating effect on the person defrauded, his or her family, as well as by the entire community. We are especially concerned about individuals aged 55+ who are specifically targeted.


This investment opportunity sounds too good to pass up, how can I find out if it is legitimate?
Contact yours state securities regulator and check to see that person and/or firm offering you the investment are properly registered to conduct business in your state. Also, inquire about the investment itself to make sure it is properly registered to be sold in your state. Lastly, if it SOUNDS too good to be true, it most likely is!

How do I know if my sales rep has any complaints against him/her?
Contact either your state securities regulator or FINRA (Financial Industry Regulatory Authority). You can find out whether or not the rep has any previous disciplinary history or any pending customer complaints.

This investment will pay me a fixed interest rate and is guaranteed, so how can I possibly lose money?
The fact that an investment is guaranteed, does not mean that it may not be fraudulent. You still need to check with your state securities regulator to make sure it is a legitimate investment. Many financial scams and frauds are based on fixed income investment opportunities with guarantees, as they are important features for many investors.

The rate of return on this investment seems high. How can they afford to pay that rate?
A promised rate of return well above current market rates should raise a red flag and be an indicator to proceed with extreme caution. Keep in mind that many financial frauds and scams do not utilize an actual product and are just bogus claims. As there is no actual product, they can promise what ever they would like. These should be avoided, as they are most often a scam.

How can I tell what the next scam or fraud will be so I can avoid it?
This is a good question, but one that is very difficult to answer. Scams and fraud offerings change as the economy changes. Rather than try to figure out what the next one will be, it’s more important to know and recognize the techniques that the fraudsters use so that you can recognize a possible fraudulent sales pitch.

What steps can I take to reduce the chances of becoming a victim of investment fraud?
There are a few steps that you can take, some of which are list below.

  • Use care with “Free Lunch” or “Free Dinner” seminar invitations
  • Avoid high-risk investments
  • Develop a “Refusal” script. Some people have a hard time saying “NO”
  • Sign up for the National “Do Not Call” registry

And most importantly, check on the registration status of the person you are thinking of doing business with, and also the product he/she is showing you.


Who to Call for Questions and Help

State Securities Regulator: Maine
1-877-624-8551 (toll-free in Maine) or 207-624-8551

State Securities Regulator: New Hampshire
1-800-994-4200

State Securities Regulator: Vermont
1-877-550-3907 (toll-free in Vermont) or 802-828-4858

FINRA (Financial Industry Regulatory Authority)
1-888-295-7422