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Protect your money from scams and fraud

As an older investor, you may be a top target for con artists. It is common for senior investors to be cheated out of savings, windfall insurance payments, and even the equity in their own homes.

You can avoid becoming a victim by following these 11 self-defense tips, developed by the Minnesota Department of Commerce and the North American Securities Administration Association, Inc. (NASAA).

  1. Don’t be a courtesy victim. Con artists will not hesitate to exploit your good manners. Save your politeness for friends and family members, not strangers looking for a quick buck! 

  2. Trust, but verify. Say “no” to anyone who presses you to make a quick decision and take time to research the salesperson, firm, and investment opportunity. You can check the status of an individual’s license at BrokerCheck or if an investment is registered with the Commerce Department by calling 651-539-1638. 

  3. Stay in control. Be wary of anyone who suggests investing your money in something you don’t understand, or who urges you to leave everything in their hands. 

  4. Don’t judge a book by its cover. Successful con artists sound and look extremely professional and can make even the riskiest investment deal sound safe. Don’t be fooled by the sound of their voice on the phone because it has no bearing on the soundness of the investment opportunity. 

  5. Don’t make decisions out of fear. Fear can cloud your good judgment and cause rushed decisions. An investment that is right for you will make sense because you understand it and feel comfortable with the risk involved. 

  6. Monitor your investments and ask tough questions. Don’t add to the mistake of trusting a fraudulent investment professional or con artist by failing to keep an eye on the progress of your investment. Insist on regular written reports, and look for signs of excessive or unauthorized trading of your funds.Ask questions about cyber-security. Make sure the firm or individual selling you a product has a plan in place to protect your private data from cyber threats. 

  7. Ask questions about cyber-security. Make sure the firm or individual selling you a product has a plan in place to protect your private data from cyber threats. 

  8. Look for trouble withdrawing your principle or cashing out profits. Some investments do have certain periods when you cannot withdraw your funds, but you must be notified of these restrictions before you invest. 

  9. Don’t let embarrassment or fear keep you from reporting investment fraud or abuse. Every day you delay reporting fraud or abuse is another day the con artist is spending your money and finding new victims. 

  10. Beware of “asset recovery” scams. These scams pack a “double whammy” by targeting individuals who have already been victims of fraud. They will lure victims with the promise of getting your money back for an upfront fee and its unlikely they will deliver on their promise. 

  11. Beware of “Senior Specialists.” Fraudsters may imply a certain level of training on issues important to people 55 and older to give you a false sense of security, however, this “training” may be nothing more than a sales tactic. They often recommend liquidating assets to purchase other, more risky products like indexed or variable annuities. 

Report suspected fraud, scams, or financial abuse to the Minnesota Department of Commerce. Your call may prevent others from being victimized.

Tips for smart investing

  1. Check the registration and background of the individual selling the investment with the Commerce Department. Anyone selling a security must be registered with the state, unless they qualify for an exemption. You can check the status of a license using the License Lookup Directory. To check the registration of a specific investment product, call the Commerce Department at 651-539-1638.  

  2. Develop a personal financial plan that meets your needs. Be sure recommendations you receive are consistent with your financial needs, risk profile, and investment objectives. 

  3. Beware of promises promoting high or unrealistic returns in a short period of time. 

  4. Diversify everything: Your assets, money managers, accounts, and financial institutions. Spreading money around will limit your exposure to risk. Don’t put all your eggs in one basket. 

  5. Beware of investments promoting no downside or risk. All investments have some degree of risk. 

  6. Do your homework. Ask questions and do your research about investments and those who sell them. Get clear and direct answers before investing, and don’t rely on reputation or word of mouth alone. 

  7. Beware of vague or over-complicated explanations of how a business runs and how money is made. If you don’t understand how it works, do not buy it. 

  8. Understand the cost. Ask about the risks, obligations and costs before investing. Keep in mind commissions, sales charges, maintenance or service charges, transactions, and penalties associated with the investment. 

  9. Understand how to access your funds in a timely manner. Ask about any restrictions or limitations on accessing your money before investing. 

  10. Ask questions about cyber-security. Before you make an investment, be sure the firm or individual selling you the product has a satisfactory plan in place to protect your private data from cyber-security threats. 

  11. Report investment fraud or securities violations to the Commerce Department. Your call may help prevent others from being victimized. If you have questions or believe you may have been a victim of fraud, contact us at the information below.
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