November 2014 Luncheon

November 2014 luncheon crop
Lorie K. Sides, Brand Integrity Service Specialist from the Better Business Bureau, provides consumer education, conducts public outreach presentations to the Military, Community Groups and Senior Citizens, and assists with dispute resolution, investigation and advertising reviews. During our November luncheon, she discussed tips on Outsmarting Investment Fraud from the Financial Industry Regulatory Authority (FINRA). She reminded us to help protect our family and friends and prevent fraud by letting them know how investment fraudsters operate and by reporting suspicious sales pitches and scams. Some common tactics include the following:

  • Phantom Riches – dangling the prospect of wealth, enticing you with something you want but can’t have, e.g. “This investment is guaranteed to produce $6,800 a month in income.”
  • Source Credibility – trying to build credibility by claiming to be with a reputable firm, or special credentials or experience, e.g. Senior Vice President of XYZ firm.
  • Reciprocity – offering to do a small favor in return for a big favor e.g. “I’ll give you a break on my commission if you buy now – half off.”
  • Scarcity – creating a false sense of urgency by claiming limited supply e.g. “There are only two units left, so I’d sign today if I were you.”

Legitimate marketers use the same tactics, except the deals they offer are legitimate, so it pays to take the time to stop and think before making a decision. Here are two ways to respond:

  • End the conversation – Practice saying no, or simply telling the person, “Sorry, I’m not interested. Thank you.”
  • Ask your own questions – ask if the person and the firm are registered with FINRA, the Securities and Exchange Commission, or a state securities regulator, and ask them to name which one. Verify answers by checking the seller’s background at or check out the firm’s Better Business Bureau Review at
  • Talk to someone first – Even if the seller and the investment are registered, it’s always a good idea to discuss these sorts of decisions with family or a trusted financial professional.

For more information, check out these resources:

Before You Invest with … If A Problem Occurs …
  • A Broker or Firm
    (800) 289‐9999
  • A Investment Adviser SEC Investment Advisor Public Disclosure Database
  • A Broker‐Dealer, Investment Adviser or Investment North American Securities Administrators Association
  • An Insurance Agent National Association of Insurance Commissioners
  • An Investment SEC’s EDGAR Database
  • Any business that wants your money
  • FINRA Complaints and Tips
  • SEC Office of Investor Education and Advocacy
  • State Securities Regulator North American Securities Administrators Association
  • Better Business Bureau
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