Unfortunately, however, tough economic times often bring con artists out of the woodwork, people eager to take advantage of consumers when they are at their most vulnerable. This has never been more apparent than with the crop of investment seminar scams flourishing around the country.
Recently, the Better Business Bureau has reported fraudulent investment seminars across the United States. For example, these investment seminars seem to be quite prevalent in New Jersey (http://www.vindy.com/news/2010/apr/27/bbb-warns-of-job-seminar-scam/) and Arizona (http://wisconsin.bbb.org/article/company-claims-to-offer-assistance…).
A common formula for the investment seminar scam is directed at senior citizens and is often designed around the concept of the “free lunch.” Seemingly benignly labeled “Free Lunch Seminars,” these seminars started popping up a few years ago, offering to provide free investment advice to seniors over a free lunch. Seniors would often be coerced into signing up for investments they did no understand and which were inappropriate for their needs. For a helpful article on this matter, see this article from The Pickens Sentinel: http://www.pickenssentinel.com/view/full_story/7771414/article–Fre…).
The Securities and Exchange Commission did issue a report on these seminars in 2007; you can view this report here: http://www.sec.gov/spotlight/seniors/freelunchreport.pdf. Some of the SEC’s findings include the fact that “Half of the examinations found that firms used advertising and sales materials that may have been misleading or exaggerated or included seemingly unwarranted claims.” The report also mentions that “although individuals aged 60 or older make up 15% of the U.S. population, they account for 30% of fraud victims” (http://www.nasaa.org/NASAA_Newsroom/Current_NASAA_Headlines/4998.cfm).
The potential for financial loss resulting from these free lunch seminars is devastating.
The AARP, along with the North American Securities Administrators Association (NASAA), has started a “Free Lunch Monitor” campaign, urging seniors to monitor and report on these seminars. The AARP Reports that “a year long examination by regulatory agencies found that nearly one out of four advisers holding the seminars recommended investments that did not appear to be suitable for the client” (http://www.aarp.org/money/scams-fraud/info-11-2009/_no_free_lunch.html).
While there may be some legitimate investment seminars out there, many are merely schemes attempting to swindle you out of money. Here are a few tips when analyzing the legitimacy of an investment related workshop:
1) Research the company providing the seminar. Check out the Better Business Bureau (http://www.bbb.org/) or the Federal Trade Commission (http://www.ftc.gov/). If it is an individual providing the seminar, research his or her credentials. If the person claims to be a Harvard Economics professor, but you can find no record of him on the Harvard website, think again.
2) Look at the message you are being sold. Does it sound sensible and realistic? Or pie-in-the-sky and over-the-top? Very few people get rich while doing no work.
3) Beware of pressuring tactics. If you feel pressured at all, especially if the information provided seems vague or confusing, walk away.
4) Stay away from guarantees. I’ll say it again: Stay away from guarantees. Nothing is sure in this world, least of all investments or the financial environment.
Check out the Federal Trade Commission’s publication The Seminar Pitch: A Real Curve Ball at http://www.ftc.gov/bcp/edu/pubs/consumer/invest/inv10.pdf for more tips and information on how seminar scams operate.
To read up more on investment seminar scams, you can also visit the following pages:
Be careful out there!