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What are common tactics that might indicate fraud?

On Behalf of | Aug 27, 2021 | FINRA |

Throughout Pennsylvania, many people are hoping to improve their finances by investing. However, there are also many people and companies that use fraudulent tactics to make money of their own. Considering that, here are several common tactics that could be an indicator of fraud.

Guaranteeing that you’ll get rich

You’re not going to find many investors who would turn down the chance to make more money. Unfortunately, fraudsters are aware of this and will use the “phantom riches” tactic to trick you. This tactic tempts you with a promise that a certain investment will bring you a lot of money.

Lying about social proof

It’s human nature to base your decisions on what other people do. Because of this, another common investment scam is using the social consensus tactic to separate you from your money. An example of this tactic would be someone urging you to invest in something with claims that many other people are making the same investment.

Offering you favors in return for making certain investments

Another fraudulent tactic is to offer favors to someone for making certain investments. For instance, someone might lower their commission rates if you spend money on a certain stock. This is a clear violation of guidelines set forth by FINRA.

Creating a false sense of scarcity

A potential scammer might also create a fake sense of urgency by telling you that there’s a limited number of something to invest in. People often use this strategy when it comes to property investments or something with a finite supply.

These are just some of the tactics that scammers can use to dupe investors. Before investing your money with any company, make sure it’s a reputable business that people trust.

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