For a Ponzi payout, call the tooth fairy

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For a Ponzi payout, call the tooth fairy

Desire to believe clouds judgment
Frankel
Joseph
7 tips for avoiding scams

The Internet is crawling with pitches for fraudulent investments. Vigilant investors can avoid them.



Watch for red-flag words: “Exclusive,” “elite,” “private placement” – these words are designed to make investors feel like they're part of a small club getting a deal that's better than anyone else.

Resist pressure: Ponzi schemes often pressure investors into making a snap decision. Ponzi expert Tamar Frankel says people should give themselves three days to rethink their choice before they send money.

Avoid high-yield investment programs, or HYIPs: These almost always turn out to be scams.

Consider the source: Check out the background of the people offering the investment, and never deal with people who aren't registered and licensed securities dealers, Frankel says.

Consider the bank: Ponzi schemes prefer to deal with unregulated financial companies that often are based offshore. Liberty Reserve is a prominent one.

Don't believe the hype: Scammers promise returns higher than investors can get in the legal market, with little or no risk. This promise defies the laws of economics, and it's a sure-fire clue to identifying a fraudulent scheme.

Keep your money home: Many Ponzi schemers claim to have a secret algorithm to profit from foreign currency trading. Fraudsters often use “forex” as a cover story for their scams.

For a Ponzi payout, call the tooth fairy

Frankel
Joseph
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