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There are a lot of fraudulent investment promotions – like the fake HoweyTrade Program – trying to con you. That is why the SEC’s Office of Investor Education created a mock video showing investors what real scams can look like.



Red Flags of Fraud

If you come across a red flag of investment fraud, don’t hand over your money. Report the fraud to the SEC. Remember, if an investment opportunity sounds too good to be true, it probably is!

Red Flag Promises of great wealth

To lure you in, the fraudster says, “I’ve made my clients millionaires. Do you want a new car?” Fraudsters show you luxurious images and imply that if you give them your money, “This could be yours.”

 Red Flag High guaranteed returns

The fraudster promises, “You can earn an extra $500 per week – guaranteed.” Don’t trust anyone who says you will make a lot of money with no risk. Every investment has risk. Generally, the higher the returns the higher the risk. Most fraudsters spend a lot of time trying to convince investors that extremely high returns are “guaranteed” or “can’t miss.”

Red Flag Exaggerated credentials

The fraudster claims, “I got my MBA and worked at top financial firms all around the world.” Fraudsters tend to make up or exaggerate their credentials. They may try to build credibility by claiming to be with a reputable firm, have graduated from a prestigious school, or to have a special credential or experience. Don’t invest with someone just because the person claims to have an impressive background or track record.

Red Flag Pressure to act now

To try to pressure you to invest right away, the fraudster says, “I’m only giving access to the first 100 subscribers!” Fraudsters may claim that only a certain number of individuals can get in on the investment. Or, they may tell you that the offer will disappear in a matter of hours. Don’t get caught up in FOMO (fear of missing out). Do your research and take your time making a decision on any investment opportunity.

Red Flag Fake testimonials and celebrity endorsements

A paid actor says, “I’ve made $1,934 in the last 10 minutes!” Fraudsters love to create a buzz and use fake testimonials to convince you that others have invested. Don’t be fooled by actors pretending to be real people who made money. And don’t make an investment just because a famous movie star, professional athlete, or other celebrity claims to have made money.

Red Flag Calling out scammers

The fraudster says, “There are a lot of scammers out there posing as experts.” Some fraudsters may try to make you think they are genuine by telling you to watch out for other people trying to take your money. This is a tactic fraudsters use to appear trustworthy.