By Kristina Ludwig, Fall 2014 Student Intern
Though there are many different types of fraud, these schemes are often perpetuated using the same psychological tactics to get you interested and invested. One such tactic is Source Credibility, which is where the fraudster will use his name or credentials to shore up confidence in the potential victim to influence him to invest. According to SaveAndInvest.org’s How to Spot the Red Flags of Fraud pamphlet, a phony seller will try to build credibility by appearing successful or attaching himself to a reputable organization. A seller might also try to dress up his office with framed diplomas or awards created in MS Paint or Photoshop, so SaveAndInvest.org suggests checking out the seller’s actual qualifications by following the following steps:
- Ask “Are you licensed to sell me this investment?”
- Then, if the seller says he is licensed, determine whether he is a broker, investment adviser, or insurance agent.
- If he is a broker, go to FINRA’s BrokerCheck or call FINRA at 888-295-7422.
- If he is an investment adviser, visit BrokerCheck or the Investment Adviser Public Disclosure database on the SEC’s website.
- If he is an insurance agent, contact your state’s insurance commission by visiting the National Association of Insurance Commissioners or by calling 866-470-6242.
Visit SaveAndInvest.org’s website here for more information and helpful hints for navigating the websites. Also, for a firsthand look at Source Credibility at work, watch SaveAndInvest.org’s video about con artist Beau Diamond, here.