Connecticut BBB Warns Consumers that a Free Lunch Can Wipe Out a Lifetime of Savin

July 20, 2010 - PRLog -- Connecticut BBB is warning consumers to research investment companies before attending their investment seminars.  

Investment scams come in many varieties and a common technique involves offering a free lunch to lure attendees to a seminar.  While this may seem like an easy way to get a free meal, people who attend these gatherings run the risk of getting drawn-in by slick presentations and promises of big returns.

In one recent example, the Securities and Exchange Commission (SEC) shut down a Ponzi scheme that cheated retirees in two states out of $20 million.

“Unscrupulous operators often target senior citizens by using a free lunch and leisurely setting for their pitch,” according to Connecticut Better Business Bureau President, Paulette Scarpetti.

“Scammers view the elderly as easy marks because they have exploitable retirement accounts and real estate.”

BBB says there are a number of indicators that an investment pitch is a scam.  Beware if the scheme…

Requires a large up-front investment:  Con artists prefer to secure a large chunk of money to enable them to leave town quickly, rather than wait for funds to trickle in.

Promises high returns for low risk:  Every investment comes with a level of risk. Risk typically increases in relation to the potential return on the investment. In other words, the higher the promised return, the higher the risk.  If the seminar is trying to sell an investment scheme that claims a high return with little or no risk, beware, even if it comes with the promise of a money-back guarantee.

Employs high pressure sales tactics:  High pressure sales tactics are often used by scammers to get people to commit money without thinking it through.  The salespeople might claim that there are only a few available spots left or that the investor needs to get in on the ground floor today to see the largest earnings.  Any reputable investment company will let you take your time to do your research, and not pressure you into handing over a check.

Relies on off-shore investments: Many hucksters try to give their scheme an air of sophistication by relying on overseas investments such as foreign currency, real estate, stocks and bonds.  They also may falsely claim overseas investments are not subject to taxation.

No individual or company has a magic formula or secret investment plan guaranteed to earn a great deal of money quickly and without risk.  If that were the case, everybody would be put their money into the same investment.  As is often the case, if your instincts tell you the offer seems too good to be true, it probably is.

For more advice from your BBB on financial planning and investing visit http://www.bbb.org/us/consumer-tips-finance/.

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Founded in 1928, Connecticut BBB is an unbiased non-profit organization that sets and upholds high standards for fair and honest business behavior. For more advice on finding companies and businesses, start your search with trust at www.bbb.org.