With people regularly losing their earnings and investments to
scammers, experts have come up with tips on how to avoid becoming a victim.
A
few years back, a young man named Kennedy (not real name) attended a seminar in
Port Harcourt on the importance of investments. He and others like him were
told to stop expending their money and learn to put some of it to work in order
to boost their finances in the future. The key speaker was particular about
investment in stocks.
Kennedy
was inspired and at the end of the seminar, he approached the ‘expert’ for
advice on how to go about buying shares. The expert was willing to help, and in
two installments, Kennedy transferred N500,000 to him for the purchase of
shares of some top companies in the country.
The
expert kept Kennedy updated about the progress of his investment for over a
year before becoming incommunicado. It took a trip to Lagos for Kennedy to
realise that he had been defrauded. At the purported address given to him by
the expert, he found out that it was a residential building. Of course, the
residents made it clear to him that there had never been a stockbroking firm in
the area, neither had they ever heard of anybody by the name the expert gave
him.
A big problem
Stories
like this abound, highlighting what experts say is the need for people to be
more careful when carrying out financial transactions.
“Just
as banks have always attracted robbers, the money management business has
always attracted charlatans,” financial advisor and money manager at Fairfield
Financial Advisors Limited, Jane King, wrote in a contribution to Forbes.
There
are many forms of financial fraud and scams today and experts say a lot of
caution is required by people if they are to stand a chance of preventing
themselves from becoming victims.
Being
careless will not only amount to the loss of hard-earned funds or savings, it
can also subject the victim to ridicule. In the case of Kennedy, while his
friends were sympathetic, they also laughed at his ‘foolishness’.
“Many
victims of financial crimes blame themselves for not seeing through the scam,”
the Washington State Department of Financial Institutions observes.
Calling
on people to take steps to protect themselves against scams it says, “No matter
what we call them — con artists, con men, scamsters — they’re criminals. They
steal our money. They’re not just people next door trying to make a living.
They are trying to deprive us of the money that we have worked hard to earn and
save. They destroy lives.”
To
avoid becoming a victim, the WSDFI says the following self-defence tips will be
helpful.
Don’t be a courtesy victim
Con
artists will not hesitate to exploit the good manners of the potential
victim. Remember that a stranger who calls and asks for your money is to
be regarded with utmost caution and scepticism You have absolutely no
obligation to stay on the phone with a stranger who wants your money. It’s not
impolite to say you are not interested and hang up.
Don’t be rushed – check it out
Say
no to any salesperson that pressures you to make an immediate decision.
If he or she doesn’t have the time to explain the investment to your regular
investment professional, or other party, or if they ask “Can’t you make your
own investment decisions?” Say NO! You have the right and
responsibility to check out the salesperson, firm, and the investment
opportunity itself. Before you even consider investing, get the
prospectus, review it carefully, and make sure you understand all the risks
involved. But remember, even written material sent from the promoter can
be fraudulent or misleading.
Always stay in charge of your money
Don’t
be taken in by anyone who wants your money and assures you that he or she is a
professional and can handle everything. Beware of any financial
professional who suggests putting your money into something you don’t
understand. And never let yourself be talked into leaving everything in
his or her hands.
Always watch over and protect your nest egg
Never
trust anyone who wants you to turn over your money to them and then sit back
and wait for results. If you understand little about the world of
investments, take the time to educate yourself. Constant vigilance is a
necessary part of being an investor.
Never judge a person’s integrity by how they look or sound
Far
too many investors who are wiped out by con artists later explain that the
swindler “looked and sounded so professional.” Successful con artists
sound extremely professional and have the ability to make even the flimsiest
investment deal sound as safe as putting money in the bank. Remember that
sincerity in a voice, especially on the phone, has no bearing on the soundness
of an investment opportunity. Always do the necessary homework.
Watch out for salespeople that prey on your fears
Con
artists know that many investors, particularly older investors, worry that they
will either outlive their savings or see all of their financial resources
vanish overnight as the result of a catastrophic event. It’s quite common
for swindlers and abusive salespeople to pitch their schemes as a way to build
up life savings to the point where such fears are no longer necessary.
Remember that fear and greed can cloud your good judgement and leave you in a
much worse financial posture.
Exercise particular caution if you have limited or no experience
handling money
Ask
a con artist to describe his ideal victim and you’re likely to hear “elderly
widow or widower.” Many people now in their retirement years have limited
knowledge about handling money. They often relied on their spouses to
handle most or all money decisions. Those who have received windfall
insurance in the wake of the death of a spouse are prime targets for con
artists. People who are on their own for the first time in years should
always seek advice of family members or impartial professionals before deciding
what to do with their money.
Monitor your investments and ask tough questions
Too
many investors trust unscrupulous investment professionals and outright con
artists to make financial decisions for them. They then compound their
error by failing to keep an eye on the progress of the investment. Insist on
regular written reports. Check the written information. Look for
excessive or unauthorised trading in your funds. Don’t be swayed by
assurances that such practices are routine or in your best interest.
Don’t permit a sense of friendship or trust to keep you from demanding this
information. If you suspect something is wrong and you don’t get satisfactory
answers, get help.
Look for trouble retrieving your principal or cashing out
profits
If
a stockbroker, financial planner, or other individual stalls you when you want
to pull out your principal or profits, demand to know why. Since
unscrupulous investment promoters have probably pocketed the funds of their
victims, they will go to great lengths to explain why your savings are not
available.
Don’t let embarrassment or fear keep you from reporting
investment fraud
Investors
who fail to report that they’ve been victimised often hesitate out of
embarrassment. Con artists know all about such sensitivities. They count on these fears
preventing or delaying the time when the authorities will be notified about the
scam. It’s true that most money lost to investment fraud is rarely
recovered. In many cases, however, when investors recognised early that they’d
been misled, they were able to recover some or all of their funds by being a
“squeaky wheel”.
BY SIMON EJEMBI
Source: Punch
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