Knowing how to detect and avoid Ponzi Schemes will help you to avoid fraudsters’ clutches. With more and more scams occurring in our society, it is wise to be aware of how to avoid their traps. By following the tips in this article, you will have a greater chance at sidestepping the Ponzi pitfalls.
THE BIG BAD WOLF
Be wary of any financial transaction that sounds too good to be true. Donald Trump has said, “Some of my best investments were ones I didn’t make.” The easiest way to spot a Ponzi scheme is if you are being offered lofty promises that come with guaranteed profits. With any legitimate business investment there is a degree of risk that makes it impossible to be assured of a profit, let alone one that comes with such a high rate of return as Ponzi Schemes do.
The promoter should be able to provide you with clear and easily explainable details. Anyone that claims there is no simple explanation for their investment is to be avoided. Many individuals that commonly fall into these scams do not have a basic understanding of the subject transaction.
Ask the promoter for a detailed clarification of the investment in writing. As an investor, of course you have the right to receive information on the venture since you will be placing a substantial amount of money in it. Inquire about receiving information on the company, the officers and their financial records. For the product being offered, ask the salesperson for documents regarding cost, fair market value and the existing and potential markets.
Often times a Ponzi promoter will solely rely on their ability to speak quickly and offer documents that appear to be official. Anyone that is reluctant to provide you with the requested data should indicate to you to be very cautious.
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