Thinking of investing? Here are a few tips to outwit scammers

Investing has grown in popularity over recent years. In 2020, we saw the biggest growth of investors because market dips made stocks cheaper to buy and the ability to invest small amounts was attractive. This is when many inexperienced investors reported entering the stock market.

Unfortunately, investment scams prey on our desire to make money without much risk or initial funding. Many are complex and it may take years for you to realize you’ve been scammed. Many start with the scammer convincing you to “invest” in a project, company, loan, etc. You may even receive reports that the project is producing great returns. But, when you try to withdraw your money, you find out the investment never existed.

Pyramid and Ponzi schemes are also common in which you allegedly buy into a company where the profit doesn’t depend on the sale of the product, but on bringing in new investors. Eventually the pyramid collapses.

To avoid investment scams, Better Business Bureau offers these tips:

■ Make sure the company you want to invest with is reputable and trustworthy. Also, ask family and friends for recommendations about their investments.

■ Beware of infomercials or online ads encouraging you to attend free events or watch free introductory videos. Scammers will use this tactic and charge a fee to get the coaching promised.

■ Be wary of reviews or testimonials by people who’ve used the program and made money. These can easily be falsified.

■ Don’t believe anything that is “guaranteed” to do well or offers low or no risk with a high return.

■ Make sure the investment is registered with the U.S. Securities and Exchange Commission or other investment industry regulators.

■ Avoid chain letters. Chain letters asking you to send money or other items of value through the mail with a promise of a return on this “investment” are illegal.

■ Never invest based solely on what you read in an online newsletter, bulletin board posting or blog.

■ Don’t give into scare tactics. Scammers may try to convince you the investment will only work if you act right now.

■ Be wary if you find the reward for recruiting new distributors and selling them products and training materials is more than the reward for selling products. You may be dealing with a pyramid scheme.