Fraudulent investment schemes are often marketed by telephone salespersons armed with high pressure and sophisticated selling techniques. Some swindlers surround themselves with the trappings of legitimacy -- rented office space, a receptionist, investment counselors, and professionally designed color brochures describing the investment.
Seniors are a prime target for fraudulent investment schemes since many have saved a good amount of money for their retirement years. Fraudulent schemes require you to invest your money -- often lots of it. Most promise you either a large increase in the value of your investment or higher-than-market interest on your capital, or both.
These schemes are fraught with danger: in most cases, you will never again see the funds you invested. And you may not even receive the promised interest. If you do receive interest, you will often be paid late. Often, unbeknownst to you, your interest will be paid from the investments of others who are newly brought into the program in order to keep it alive. The swindler hopes these payments will allay any suspicions you might have as to the strength of your investment.
If answers to any of the following questions are yes, you may be dealing with a swindler who wants you to put money in to a fraudulent investment:
* Does the salesperson make it sound as you can't lose?
* Are you promised an unusually high rate of return or interest payment on your capital?
* Are you pressured to make a decision immediately or in a short period of time because new investment units "are selling fast?"
* Does the salesman have any prior successful experience in the investment area he is promoting?
Protect yourself. Be suspicious of any deal that promises fantastic return at little risk. Know whom you are dealing with. If you are not sure, check the company's reputation with your local Better Business Bureau, Postal Inspector's Office, or District Attorney's Consumer Protection Unit. You can get receive information about fraud from some online lawyer sources like bank fraud lawyers, check fraud lawyers, credit card fraud lawyers, mortgage fraud lawyers etc. The fraud lawyers are fraud claims law specialists. The identity fraud lawyers or Identity theft lawyers can help you with identity theft matters. These identity theft lawyers also provide useful advice to clients on preventive measures that need to be adopted. While insurance fraud lawyers and Internet fraud lawyers can help with matters related to fraud in Insurance and Internet.
Protect your retirement nest egg. If you've been the victim of an investment fraud where the mail was used, contact your local postmaster or the nearest Postal Inspector. An investment fraud lawyer or investment fraud attorney can help you as they have knowledge and experience in investment fraud laws.
In Illinois, consumers are protected by the Illinois Consumer Fraud and Deceptive Business Practices Act that protects consumers against misrepresentations, deception, and fraud by businesses and individuals providing goods and services.
Schemes Against Businesses
Every year businesses lose millions of dollars to con games and fast- talking promoters through a wide variety of different schemes. There is no limit to the imagination of the con artist who is scheming to defraud a company of its earnings.
While law enforcement officials and government agencies are constantly trying to halt schemers who prey on business, successful operators are usually just one step ahead of the law as they dream up new tricks and scams.
"Bogus Ad Solicitations"
The business executive receives an advertising solicitation, usually over the telephone, for an unfamiliar publication. The publication-- either a magazine or a newspaper-- may be a "special edition" or be limited to a particular readership, such as the local police or farm workers. A telltale element in this scheme is the very flexible salesperson who quickly reduces the advertising rates if the customer sounds hesitant. The pitch may also imply that part of the advertising revenue will be used to support community programs.
Although the publication may have the word "national" or "American" in its name, the promoter if asked will probably provide only vague circulation figures. In fact, the publication may not even exist, or is distributed only to advertisers; its rates may be inflated and its actual readership non-existent.
"Advertising Specialty Product Promotions"
Businesses often receive high pressure phone calls fromcompanies promising them fabulous prizes such as cruises, color televisions, video recorders, and microwave ovens if they will order products from the companies or pay a fee. The products may be vitamins or various advertising specialty products, including key chains, pens, ice scrapers, first aid kits, desk calendars or other merchandise, often imprinted with the purchaser's name or company name.
The merchandise is usually paid for by the customer COD (collect on delivery), by cash or money order, or charged on a credit card, sometimes without the customer's authorization. According to the U.S. Postal Service, the overall majority of the participants in these promotions receive gifts that are of far less value than represented.
Schemers know that a business sometimes makes mistakes or can be careless in its accounting, so they prey on these weaknesses. Lifting names from mailing lists, business registers, the Yellow Pages or published advertisements, swindlers send "pro-forma" invoices for directory listings or advertising in various publications, journals or directories.
The invoice may seem genuine to the company's accounting department, and may even include the name of a company executive as the "authorizing agent." However, the invoice may be a solicitation in disguise and in very fine print contain the following disclaimer: "This is a solicitation. You are under no obligation to pay unless you accept this offer."
Although the law states that it is illegal to send such a solicitation without the disclaimer being conspicuous and in large print, there are those who flout the regulations and send disguised solicitations. These phony invoicers are often persistent and they may send a company two or more invoices for the same advertising in the hopes the "bill" will be paid twice.
"Office Supply Schemes and Paper Pirates"
This scheme covers a wide range of goods that are peddled around business offices. But whether the offer is for photocopying paper, copying supplies or ballpoint pens, the deal looks like a bargain. Sometimes, the supplier makes a pitch over the telephone, or may just show up on the premises. Usually, the supplier tries to deal with an employee who is unfamiliar with purchasing procedures.
A common approach is for the salesperson to claim "liquidation of stock" or "going out of business." One often-heard story is that "just by coincidence" there is a shipment of supplies that was mistakenly labeled with your company's name and you can have them for a "rock-bottom" price. Or, maybe there is a claim that another business in the community has canceled the order and the supplies are in town ready for immediate delivery.
Whatever the reason for the bargain prices, the merchandise is usually "bad news" for business. The supplies may be inferior to those described in the sales pitch, greatly overpriced, or may come in amounts twice those ordered.
"Advance Fee Loan Brokers"
Businesses in need of commercial loans to expand or even stay afloat may use the services of loan brokers. While some advance fee loan brokers are legitimate, many are not. In this scheme, a business will answer an advertisement regarding the availability of money to lend. During a meeting with the loan broker, a contract is signed and the client is asked to submit an advance fee for finding the risk capital or loan. The advance fee is payment to the broker to prepare a business plan and present it to prospective investors. However, the disreputable "broker" may make no effort to find funds as promised. Instead, the business receives no loan, and loses all advance fees paid to the broker.
"Shifty Service Rep"
This scam takes place right on the business premises. A company is approached by someone other than the usual repair or service representative. The person may show up at the loading dock or in other work areas, away from the employee responsible for arranging the service. This unfamiliar service representative may make special offers such as "free inspections" or "two for one" deals to persuade an unsuspecting employee to use the services.
The trademarks of these con artists are shoddy materials and poor workmanship. Perhaps these people will even try to steal a machine. For example, while repairing a typewriter, a switch might be made to an inferior model without the office personnel being aware of the theft. Or, the schemer may claim that the particular model is being recalled and will leave with the machine, never to return.
"The Vanity Pitch"
"Dear Business Executive" begins the letter. "We would like to include your name and accomplishments in our next edition of 'Who's Who in the Business World.'" All too frequently, such pitches for "Who's Who" type publications, biographies of successful people, or nominations for awards or special memberships have a catch to them. The executive who is flattered into providing the details ofhis or her career may be stuck with a subscription fee, a charge for the listing, or an inflated price for buying the publication.
A variation on this scheme is the vanity publisher who offers to publish an executive's book and then charges an exorbitant price for the printing and materials. The author is even left to distribute the book personally.
"The Charity Plea"
Businesses often are asked to buy tickets for a charity event or to donate to a worthy community cause. Promoters may ask executives to buy a block of circus tickets, with the proviso that underprivileged children will attend and the ticket income will benefit a certain charity. Another common appeal may be from a group that sounds as if it is connected with a law enforcement agency, soliciting for troubled youth, or for the families of slain police officers.
Businesses may feel very positive about donating to a worthy community cause. While not all fund raising events are cause for concern, deception comes into play if the solicitor implies that all funds will go to the charity, when, in fact, most of the money collected goes directly to the fund raisers themselves.
And the Schemes Continue...
While the aforementioned schemes are the most common, they by no means represent the con artist's full bag of tricks. Other scams, like the ones listed below, come and go at different times of the year and in various parts of the country.
* Official decals: Promoters sell police, fire department, sheriff or highway patrol decals with the implication that the stickers will give the car owner "added protection."
* Collection services: The fly-by-night collection agency greatly overcharges for its services. A twist on this scheme is to sell a business a series of collection letters.
* Peddlers: Young people may show up in the office selling high priced magazine subscriptions, or overpriced chemical cleaners, with a sob story about putting themselves through college.
* Damage claim artists: They may stage an accident in your office or building, threaten to sue, then settle for an out-of-court payment.
* Coupon promoters: A business is persuaded to offer discounts or extras in coupon books sold by promoters to consumers. But, the promoters may change the terms of the coupon to make them more attractive to buyers. Then, the books may be over-sold, or sold outside the firm's normal business area.
"Red Flags" to Watch for
Knowledge is an important and useful tool in recognizing and defending your business against a swindle. Following are some common warning signs that may indicate a scheme is underway to bilk your company:
* The deal is almost "too good to be true." Look very carefully at any offer with fantastically reduced prices, unrealistic claims of high quality and low cost, or lots of extra service and giveaways.
* The sales pitch sounds more than just "aggressive." Be wary of salespeople who use intimidation, harassment, or threats to make their deal.
* Insisting on an immediate decision, either over the telephone or in person, may signal an unscrupulous schemer.
* A con artist will avoid or side-step even reasonable questions. For example, it may be difficult to get a straight answer about the circulation of a touted publication or about the promoter's references.
* The promoter has a shady or vague business history. Be on guard if it is difficult to learn about details of other companies and other business people who have dealt with a promoter.
* Sometimes the schemer will drop the name of a higher executive in your company, or the name of a company with whom yours does business, in order to persuade you that the offer is legitimate.
How to Protect Your Business
Businesses can protect themselves if they are constantly wary of schemers.
Never let your guard down. Use common sense in all your business dealings. Clearly, not all strange sales or promotions represent schemes against business. Be wary of unfamiliar service or sales personnel, telephone promoters or charity appeals. Yet, realize that many reputable businesses offer legitimate goods and services described in this pamphlet. A business armed with the facts of a deal should be able to separate the scheme from the honest transaction.
The following suggestions might help if you are in doubt about a business proposition:
* Refuse to make commitments with unknown persons, especially over the telephone. Ask that all advertising propositions, charitable appeals, requests for biographical information, and sales pitches of any type be made in writing.
* When dealing with publications, insist on verifiable circulation figures, details of publication dates, name(s) of publishers, number of paid subscribers, and sample copies.
* Institute strict controls in the accounting department. the handling of invoices, for example, should be centralized and authorization should be closely checked.
* Keep a list of regularly used publications as protection against schemers who claim that the company previously has used the publication.
* Centralize the control of supply and repair orders, so that fewer employees will be vulnerable to the sales gimmicks of disreputable suppliers.
* When asked to donate to various causes, find out the full name, address, and purpose of the charity and ask for a copy of the organization's latest financial statements. Make checks payable to the charity itself, not to an individual solicitor.
* Compare the prices and quality of products with other suppliers if you are offered a deal from an unknown salesperson.