BBB Staff Report
Investment scams are getting more sophisticated and scammers are quite talented at deceiving people, resulting in more victims. Ever wonder how scammers do what they do? The Financial Industry Regulatory Authority Investor Education Foundation, along with the Better Business Bureau of Minnesota and North Dakota, provide some interesting theories on the science behind scams. Here are some of the most common tactics:
The “Phantom Riches” Tactic — dangles the prospect of wealth, enticing you with something you want but can’t have. “These gas wells are guaranteed to produce $6,800 a month in income.”
The “Source Credibility” Tactic — tries to build credibility by claiming to be with a reputable firm or to have a special credential or experience. “Believe me, as a senior vice president of XYZ Firm, I would never sell an investment that doesn’t produce.”
The “Social Consensus” Tactic — leads you to believe that other savvy investors have already invested. “This is how __ got his start. I know it’s a lot of money, but I’m in, and so is the rest of my family. It’s worth every dime!”
The “Reciprocity” Tactic — offers to do a small favor for you in return for a big favor. “I’ll give you a break on my commission if you buy now, half off!”
The “Scarcity” Tactic — creates a false sense of urgency by claiming limited supply. “There are only two units left, so I’d sign today if I were you.”
Never rush when making any purchasing decision, and don’t be afraid to say no and walk away. For more information on avoiding scams, visit http://www.bbb.org/us/scam-source/.
The mission of the Better Business Bureau is to be the leader in building marketplace trust by promoting, through self-regulation, the highest standards of business ethics and conduct, and to instill confidence in responsible businesses through programs of education and action that inform, assist and protect the general public. Hours of operation are 8 a.m. to 5 p.m. Monday through Friday. Contact the BBB at bbb.org or 651-699-1111, toll-free at 1-800-646-6222. Visit the Centennial website at bbbis100.org.
