Investing scams are unfortunately common and can have devastating consequences, as seen in the recent case involving a Beverly Hills company, Oxford Gold Group, which left many investors fearing for their financial futures.
This company promised to convert retirement accounts into precious metals but has now seemingly vanished, leaving customers worried that their nest eggs have disappeared.
Some customers invested significant portions of their retirement accounts with Oxford Gold, drawn in by the company’s impressive marketing and positive reviews. However, when they attempted to verify their investments, they discovered that the gold supposedly purchased on their behalf was never actually delivered.
Investors from several states have accused Oxford Gold of misappropriating funds, and the company now faces a flood of negative reviews and claims of being a scam. Investigations are ongoing, and authorities are warning investors, particularly seniors, to be cautious when trading in precious metals or starting to invest with someone you don't know.
Here’s a closer look at 10 investing scams that could cost you dearly and what to do if you find yourself caught in a fraudulent scheme.
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1. Cryptocurrency scams
As an asset class, cryptocurrency has been gaining a big reputation. But since average investors don’t know the ins and outs of investing in crypto, fraudsters can swoop in to take advantage.
Criminals tend to showcase a particular cryptocurrency as a sure winner. After the mark purchases the crypto, the scammer gets to keep the money while you might be left holding a virtually worthless asset.
Before making a cryptocurrency purchase, research the coins you’re interested in. To further protect yourself, buy your crypto assets through a reputable exchange .
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2. Romance scams
A romance scam is often a slow-burning scheme. It starts with a criminal striking up an online relationship with you. When they gain your trust, they might share a “hot tip” about investing. Usually, this “helpful tip” is actually a scam.
If you meet someone online, be careful about trusting them with sensitive financial information. At the very least, wait to share too much of your trust until you meet in person. Don’t send any money to someone you haven’t met in real life.
3. Investment training scams
While many scams involve selling you an asset, investment training scams involve teaching you about the stock market. But unlike the many legitimate resources available, investment training scams won’t teach you anything valuable about building an investment portfolio.
The best-laid scams often involve selling you on the “secret” to investing. Plus, many scammers will look the part, with flashy vehicles and clothing, to convince you of their investment success.
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4. Real estate investing scams
Real estate investing scams involve selling you a piece of property for much more than it’s worth. For example, you might be targeted to buy a piece of land with unverifiable development opportunities.
After you purchase this type of real estate asset, you’ll have trouble reselling it for more than you paid.
5. Real estate training scams
Like investment training scams, real estate training scams involve selling you on the dream of making a killing in the real estate business with little to no effort on your part.
Unfortunately, that’s not the reality of making money in real estate. But once you discover that truth, you might have already wasted thousands of dollars on this real estate training course.
6. Precious metal scams
Precious metal scams typically involve rare coin dealers or metal dealers. They’ll try to sell you coins or precious metals, whether or not it’s a good time to buy.
In general, these scammers offer a guaranteed profit. But you might get stuck holding a precious metal that is actually losing value.
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7. Pump-and-dump scams
In a pump-and-dump scheme, scammers contact a list of potential investors to push the purchase of a particular stock. Of course, they promise outlandish returns.
But when enough people buy the stock, the scammers will sell their own shares. At that point, the stock price falls, and you are stuck holding worthless stocks.
When it comes to investing, avoid purchasing from someone you don’t know. Also, avoid committing to a stock without taking the time to do some research on your own.
8. Artificial intelligence voice scams
Artificial intelligence (AI) can be used to imitate someone’s voice or image. Fraudsters are taking advantage of this new technology by using it to imitate famous people or one of your friends.
In general, the scam works when a “celebrity” or “friend” calls to tell you about a particular investment. Like all scams, the investment opportunity is too good to be true. If you fork over your money, you likely won’t get it back.
To avoid an AI voice scam, verify who is making the call before proceeding. For example, if someone calls claiming to be your daughter, contact your daughter differently to confirm their identity. Or ask about a memory only your family members would know about.
9. Advance-fee scam
An advance-fee scam involves getting you to hand over some money now in exchange for big returns later. Of course, when you give the scammer your funds, you won’t see them again.
If someone calls with this type of opportunity, hang up.
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10. Commodities trading scams
Commodities are a legitimate form of investing. But since many of us don’t understand the intricate workings of commodities trading, scammers prey on that.
Essentially, a commodities trading scam involves a scammer selling you a worthless asset. When you send the funds, you won’t get them back.
Bottom line
When it comes to investing, if something sounds too good to be true, it’s usually a scam. As you build an investment portfolio , safeguard your assets by staying vigilant for potential scams.
If you spot a scam, don’t hesitate to report it to the Federal Trade Commission.
Money tips that can work for everyone
No matter what your bank account balance is, there's always an opportunity to optimize and improve your finances. Here's a quick checklist of things you can look at today.
Focus on paying off your debt . Debt can hold you back from making progress with your overall financial well-being. Aside from cutting expenses, there are tools that can help you pay off debt faster like balance transfer credit cards and debt counseling.
Earning extra income can give you breathing room. If finances are tight, earning some extra money to supplement your income can make a huge difference. A new job is one option to consider, but if you're not ready to make a big change or already retired, a part-time side job could be a better choice.
Cut your expenses. It sounds painful and so not fun, but it doesn't have to be. Take a look at your biggest expenses because that's where you'll probably find the biggest savings. For example, auto insurance rates have been soaring so shopping around for a new insurance company can be the fastest way to cut your bill. Also, look for ways to cut your grocery bill (despite rising inflation).
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