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Important Tips

Con Artists

Effective con artists must disguise their true motives. Whether your first contact with the fraudster is through an unsolicited telephone call, a stranger ringing your doorbell, or the internet, he or she takes goes to great lengths to look and sound trustworthy. Often, con artists like to blend in with others in a group, from political, community-based organizations (such as the local senior center) to religious institutions. They quickly get to know a lot of people, counting on the community to spread the word about their questionable investments and reel in unsuspecting investors.

Even though con artists would have you believe that they are regular, every day people, they are smart enough to realize that this alone will not convince you to part with your money. They work hard to establish a persona that’s smooth, professional and successful. Fraudsters may dress like they are wealthy and work out of impressive offices. If your only contact is by correspondence, the office may bear a prestigious address but is likely nothing more than a mail drop. Your best bet is to look behind the surface and do some serious research before you part with your money.

Con artists can come across as very friendly. They take a personal interest in you and your life. They call back when they promised they would. Each time, they tell you even more great things about the investment. You may feel as if you're being pressured into investing, and usually you are. Despite his or her kind words, the con artist will do anything in their power to make a sale. In fact, the contact may become so frequent that you wish that your first contact had been your last. However, all too often contact stops only after you have invested your money.

Poorly Understood Financial Products

Con artists often push poorly understood financial products. Today, a variety of institutions, from banks to brokerage firms to financial planners, offer a wide range of financial products. With such a mix of products to choose from, it is no wonder that many people turn to financial advisers for guidance. Con artists know this and stand ready to assume full responsibility for your investment decisions. Don't let them! When it comes to your money, get all the facts and carefully think things through before making any decision. Never give someone control over your finances just because you think you are too old, too young or financially inexperienced. If you really need help, only deal with financial advisers, broker-dealers or financial institutions with a proven track record.

Playing on Your Emotions

Many people hope for their very own rags-to-riches story – they just need to catch a break to make it happen. To them, investing in untested technologies and cutting-edge products before anyone else is a sure-fire way to make money. International instruments such as letters of credit supposedly issued by foreign banks may spell stability for some people. Con artists recognize these desires and exploit them. They promise the investment opportunity of a lifetime, without giving you any meaningful written information on the product or the pitfalls that come with it.

Skilled con artists can bring out your worst traits, particularly fear, insecurity and greed. Fear comes into play when the fraudster leads you to believe that you won’t have enough money to sustain your lifestyle in retirement, and investing with them could solve this problem. Alternatively, they warn you that complaining about a failed investment to the government may result in spoiling it for others or 'rocking the boat.' They know how to make you believe that if you lack confidence in their abilities, it’s a personal slight against them. If you find yourself making investment-related decisions based only on emotion, watch out!

Too Good to be True

Stay away from opportunities that sound too good to be true. Be especially cautious if you have a large sum of money and are looking for a safe investment vehicle. In particular, retirees with access to their retirement funds may be attractive targets for con artists and fraudulent operators. Getting your money back once it is gone could be impossible.

Cash Transfers

Be wary of sending or transferring cash on the Internet or by mail. Phony currency trading firms, investment dealers and bogus stock exchanges are using the Internet as an inexpensive and effective way of reaching a large number of potential customers. Be alert to the dangers of trading online. It is easy to transfer funds online, but can be impossible to get your money back. Many companies offering investment services online may not be located in Manitoba or may be operating offshore. Be aware that once you transfer funds to foreign jurisdictions, it may be difficult or impossible to recover your investment.

Unlicensed Individuals

Quite often people approach individuals about an investment that is legitimate. However, they may not be licensed to sell the investment and therefore are likely not knowledgeable enough to inform you about all of the risks involved. To verify that a person is licensed and registered to sell securities, contact The Manitoba Securities Commission.