Members should always think carefully before putting hard earned dollars into investments that promise big returns with little risk. The old adage "If it looks too good to be true, it probably is" is often too true when it comes to guaranteed double digit returns.
One common but sophisticated scam is the Ponzi scheme. A fraudulent investment is presented to investors as legitimate. Scammers go to great lengths to present their schemes as legitimate, with shareholder meetings and facility tours. They make the investment look like it is performing by making early payments. In reality, money from new investors is used to pay earlier investors, with the scammers taking a healthy cut.
- Check with a reputable investment advisor, accountant, securities regulator or government agencies.
- Check the background of the investment promoter.
- Beware of promises of guaranteed high returns.
- Be careful about investing in companies with no current revenue.