By Mary Ann Hanke, Fall 2016 Student Intern
The term “Asset Recovery Company” on its face sounds exactly like the type of company you might want to hire if you have been the victim of an investment scam. You have likely lost a large amount of money, and you want to recover what you can. This post will provide information to ensure you know that there are risks and how to protect yourself.
If you have been the victim of an investment scam, your name might be on lists of victims in different court filings or other investor tools. An Asset Recovery Company gathers this information and begins calling victims of fraud, promising things like full recovery of the funds lost and regulatory action against the perpetrators.
No surprise though, that these companies charge a large fee for their services and often cannot deliver on their promises. Many of these companies claim to be, or imply, that they provide legal advice, even though they are not real law firms. They may also only do work that the victim himself may have been able to do. So on top of a large loss from an investment scam, a victim may end up paying more money for fraudulent services in the hopes of getting back their investment money.
How then, can an already victimized investor protect himself? Some questions to consider:
Is it something you can do on your own?
Drafting a demand letter to the scam perpetrators and even filing a claim to initiate a proceeding to recover assets are both things that victims can do on their own, for free. Most of the time, these asset recovery companies will draft only generic, boilerplate complaints that they downloaded from the internet. If they are suggesting something that is not any more sophisticated or specific than what public information you may find online, beware of these companies.
What are the fees?
These can range from small to very large, depending on the size of your initial investment, and what the asset company believes you are worth. Be wary of exorbitant fees for exaggerated services.
What services do they claim to provide?
Remember, if a company claims to provide legal services or advice, those individuals must be licensed practitioners. Ask for their names and license numbers to ensure this claim is valid.
Contact a professional.
By far the best way to protect yourself from Asset Recovery Companies taking advantage of your vulnerable position, is if you think you have been defrauded, contact a lawyer or your state securities regulator. They will be able to provide real advice and offer practical solutions to help you recover whatever funds may reasonably be gained.