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How to avoid falling victim to an online financial scam | ABC News

One of the big trends in online fraud is the emergence of Fake Investment Scams. Consumers are think they are dealing with major banks or investment companies but in reality they are being tricked into handing over their life savings to scammers.

In this story ABC News goes deep inside a scam to see exactly how one Melbourne man was tricked by scammers posing as financial advisors from JP Morgan. The real JP Morgan has nothing to do with it and didn’t even have any idea it was going on until much month after the scams had begun. The inside workings of these scam operations are so clever it could happen to anyone.nvestment scams lure you in with promises of teaching you how to make a lot of money quickly, easily, and with low risk — usually by investing in the financial or real estate markets. Sometimes starting with a free seminar, the scammers later will charge you a hefty fee for their “proven” investment tricks. But the real tricks are the lies they tell you.

Investment Coaching Scams

In an investment coaching scam, the scammer will tell you that their “patented,” “tested,” or “proven” strategy (or something similar) will teach you how to make money investing in stocks, bonds, foreign currency, or tax liens. They promise that their investment approach will set you up for life — and even let you stop working.

What to watch out for

They get your attention with infomercials or online ads, encouraging you to attend free events or to watch free introductory videos. But later you find out that you have to pay a hefty fee to get the coaching they promise. They’ll show you success stories of people who have used their coaching program. But you have no way of confirming that their stories are true.

What to know

The truth is that the promoters of investment coaching scams exaggerate the money you can make with their system. They also fail to give you the step-by-step guide they promise, and lie about other people’s success. It’s all part of a marketing scheme to get you to pay thousands of dollars for what turns out to be empty promises.

Real Estate Investment Seminar Scams

In-person and online seminars about how to invest in real estate often promote “risk-free” training or business coaching systems.  They may lure you in with big promises or guarantees of financial freedom, saying they’ll teach you how to make lots of money. But many real estate investment seminars are scams.

What to watch out for

The promotional materials and sales pitches used for real estate investment seminars often make over-the-top claims:

  • Scammers say you can earn big money fast, regardless of your experience or training. But that’s not true.
  • Scammers promise their deal is a “sure thing” that will give you security for years to come. It won’t.
  • Scammers say you’ll rake in money by working part-time or at home. But most people don’t.
  • Scammers promise you’ll be coached to success each step of the way. But there’s often little coaching, and no success.
  • Scammers claim the program worked for other participants — including the organizers. And it might have, for a few people, but most people never make their investment back.

Don’t be convinced by ads with success stories of people saying how much money they made with little time, effort, and risk. Or ads that feature celebrities praising the program. Those kinds of claims aren’t reliable and don’t mean the program works. Real estate investment scams often use fake testimonials and pay people to endorse their programs.

What to know

For most people who invest in these real estate investment seminars — some of which cost thousands of dollars to buy into — the pay-off doesn’t match the promise. In fact, most people never get back the money they invested.

How to Avoid Investment Scams

If you’re considering paying for a program that promises to help you invest your money, stop and consider these things first:

  • Statistics and testimonials can be faked. Scammers want you to believe their program is always successful. They might show reviews or testimonials by people who’ve used their program and made lots of money. But those could be paid actors or made-up reviews. You have no way of confirming their stories.
  • Scammers exaggerate the significance of current events. Scammers follow the headlines and use current events to make their investment opportunity seem exciting, innovative, and timely. They want you to feel pressured to commit now without having fully researched the offer.
  • No one can guarantee a specific amount of return on an investment. Scammers might claim that you can make thousands of dollars per day or per month for life. But they don’t tell you the risks. No one can guarantee that an investment will be successful. And if you ask questions about the investment, they might give you vague answers and focus only on how much money you’ll supposedly make.

See the U.S. Securities and Exchange Commission (SEC)’s investor alert for more tips.

Read more on ABC News:…

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