Investors Beware: Scams Are Everywhere, Says Bard

ABINGTON – You read about it, shake your head, and assure yourself that it could never happen to you – but it could. Scam artists are clever. Your best defense is a healthy dose of skepticism and common sense, says Rep. Ellen M. Bard (R-153).

"Federal and state regulators, including those with the Pennsylvania Securities Commission (PSC), do their best to protect the public. However, one of the most effective ways consumers can guard against fraud is to be informed about the types of scams that are out there," said the Montgomery County lawmaker, who recently received reports from local residents of possible scams.

The PSC recently released a list of the "Top 10 Scams":

Internet fraud - Con artists are using the Internet to "peddle" small stocks, bogus offshore "prime bank" notes and fraudulent pyramid schemes. Never invest based on a "tip" on the Internet without doing independent research;

Investment seminars - Investors should be very wary of expensive "get rich quick" seminars. Usually, the only people to get rich are the people running the seminar;

Affinity group fraud - Members of closely knit religious, political or ethnic groups are targeted by con artists of the same religion, ethnicity or political orientation. They seek to take advantage of our natural trust of people who are like us;

Abusive sales practices - State and other securities regulators report progress in the fight against stock fraud through prosecuting brokers who specialize in the manipulation of low-priced securities. Nevertheless, investors need to be on guard and should hang up on aggressive cold callers;

Telemarketing fraud - New high-pressure telephone sales operations are open all the time, selling illegal or fraudulent investments and trying to capitalize on public fear over the year 2000 computer problem. Investors should screen calls and refuse solicitations by cold-calling salespeople;

Promissory notes - A growing area of fraud, promissory notes are supposedly "insured" and backed by real assets. Often, they are backed only by a worthless promise to repay. Some notes are issued on behalf of companies that don’t even exist;

Viatical investment scams - One of the hottest new investment products and one of the riskiest, viatical contracts are interests in the death benefits of terminally ill patients such as AIDS and cancer victims. The insured gets a percentage of the death benefit in cash, supposedly to improve the quality of their lives in the last days. Investors get a share of the death benefit when the insured later dies, after a fee is paid to the viatical investment broker. These investments must be considered extremely speculative;

Entertainment Fraud - Con artists zero in on investors hoping to hit it big by buying a piece of the next "Titanic." Besides movies, investment vehicles include cable television shows, video games and other entertainment products;

Ponzi/pyramid schemes - Always in style, these schemes promise high rates of return to investors, but the only people who really make a killing are the promoters who set them in motion;

Illegal franchise offerings - States have taken actions relating to inadequate disclosure and fraud involving franchise investments, often marketed at business opportunity trade shows where promoters target people attracted by the prospect of owning their own business.

Before making an investment or doing business with a stock broker or investment promoter, Bard strongly advises calling the PSC at 1-800-600-0007 to find out if the prospective seller is properly registered and has a clear disciplinary history. For investor education information and administrative actions taken by the commission, visit the commission’s Web site at www.psc.state.pa.us .

"If you do fall victim to a scam, remember, there is no shame in it. It could happen to anyone. Seek help and report it right away," Bard urged.