Californians fall prey to more online investment scams and lose more money than residents of any other state in the country, according to the FBI’s Internet Crime Complaint Center (IC3) Report. Even though investment scams make a small portion over the overall types of scams reported to authorities, the amount of monetary losses to fraudulent schemes is shockingly high.
San Diego is no stranger to its share of investment scams. One thing that makes Ponzi schemes and other investment scammers successful is that fraudsters use the façade of legitimacy to prey upon people they know and get victims to trust them.
It’s natural for anyone with extra cash to want to invest their funds in order to multiply them. But before you hand over your money, know that if it sounds too good to be true, it is. Here are some tips:
Learn as much as possible about the person promoting the investment.
Verify the license of the person selling the investment and that the investment is registered.
People selling investments in California typically need to be licensed by the California Department of Financial Protection and Innovation.
You can verify the license by calling DFPI at 866-275-2677 or visit their website at https://dfpi.ca.gov.
Most investments must be registered through the Securities and Exchange Commission, or in California, through DFPI.
Registration doesn’t guarantee that an investment is good, legitimate, or safe, but an unregistered investment raises red flags because there is no oversight.
When researching a potential investment ask for a prospectus or offering circular.
You want to fully understand the business before investing. If they tell you that a prospectus or offering circular isn’t necessary, walk away.
Never invest in something until you have written material about the company and the investment and have taken the time to check it out.
Do your own research before you invest and don’t rely solely on material provided from the salesperson.
Talk to a financial professional knowledgeable in investments.
If you are interested in the investment, talk with a third party or disinterested person.
Ideally, talk to your stockbroker, attorney, accountant, or any other reputable consultant. This is especially true if you lack financial experience.
If the opportunity sounds too good to be true, it is.
Beware of promises of high rates of return, quick profits, and/or “guaranteed returns.” Con artists know what appeals to people. The higher the return, the higher the risk. Every investment carries some degree of risk.
Be suspicious of individuals who tell you that you must act now. This is a “once-in-a-lifetime offer that will be gone tomorrow” is a trick used by con artists to get you to part with your money.
You should always have time to make an informed decision on a legitimate investment opportunity. Any ethical salesperson will understand this.
Beware of unsolicited and online offers and online scams.
Always treat unsolicited phone offers to invest with skepticism.
It is easy and cheap to create a fancy looking website populated with false and misleading information. Do not assume that online people or organizations are who they say they are.
Investments in cryptocurrency and foreign currency are almost always scams, use extreme caution here.
If you have been contacted by a scammer, report the contact online via the Internet Crimes Complaint Center (ic3.gov). If you fall victim to any of these types of scams, don’t be embarrassed. Report the scam to your law enforcement agency.
As your District Attorney, I’m committed to increasing communication and accessibility between the DA’s Office and the public. I hope these consumer and public safety tips have been helpful.
