Alert Clients to Common Investment Fraud and Scams

Life and Health Agents who communicate with clients and prospects via a periodic email newsletter or even social media postings build trust by alerting them to popular investment fraud schemes.

The North American Securities Administrators Association (NASAA) provides excellent information on investor fraud. Some of the top investor threats are classic schemes in new packaging – using technology and news trends to dupe investors into parting with their money in hopes of hitting it big.

Top 2015 Investment Scams

NASAA identified four big emerging threats for 2015:

• Binary Options
• Marijuana Industry Investments
• Stream-of-Income Investments
• Digital Currency and Cybersecurity Risks

The association also identified what it calls “persistent threats,” or classic fraud schemes, it and state regulators see over and over:

• Regulation D/Rule 506 Private Offerings
• Pyramid and Other Ponzi Schemes
• Real Estate Schemes, Including Those Using Promissory Notes
• Affinity Fraud
• Internet Fraud (including Social Media and Crowdfunding)
• Oil and Gas Investments in the Fracking Era

The Get Insured 24/7 blog will explain these types of investor fraud in a series of future posts. As a rule, clients should know that any investment opportunity that uses classic “hard-sell” tactics is a red flag. The NASAA has identified several such approaches:

• “This investment has guaranteed high returns – no risk!”
• “There’s a shortage – get in before it’s too late!”
• “This is an offshore investment – tax free!”
• “You can profit like the experts – get the secrets to success!”
• “Great investment opportunity – your friends can’t be wrong!”

Encourage Clients to Investigate Backgrounds

Legitimate, licensed Life and Health agents work diligently in the best interests of their clients. Clients should be encouraged to check out the backgrounds of any person or other company that contacts them about investing. Two places for them to start:

How to contact state securities regulators
How to check out brokers or investment advisors

By sharing information about fraud schemes, Life and Health agents, particularly those who also offer annuities and other investment options, not only build trust – they perform a valuable public service.

Insurance agents and their clients also can keep up with fraud warnings from industry sites, including InsuranceFraud.org and the Association of Certified Fraud Examiners.