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Investment fraud -- it's probably too good to be true

Radio Transcript, 2 minutes 25 seconds, for use during week of March 31.

Description:  Susan discusses investment fraud with Craig Goettsch, director of investor education for the Iowa Insurance Division

Announcer: Invest Wisely comes to you from Iowa State University Extension through a grant from the Investor Protection trust, providing investor education on the web at: investorprotection.org.

Susan: Craig, last time we met, we talked about investment fraud and particularly about the fact that anyone can be a victim of fraud.

Craig: That’s right.  Often investment fraud victims are knowledgeable about financial issues and college educated, yet they still fall victim to investment fraud schemes.

Susan: So – I’m curious about the types of complaints that come into your office.  What other types of investment fraud should I watch out for?

Craig: We see a lot of Investment fraud and scams that occur through telephone and e-mail.  These scams can be very clever. 

Susan: Are there specific tactics we might expect from these callers?

Craig: It pays to be careful when anyone approaches you with an investment opportunity through telephone or e-mail.  In particular, watch for high pressure sales tactics and false promises. 

Susan: I’ve had callers offer me a safe or guaranteed investment that has a 12 percent return.  I just hang up on them.

Craig: That’s a good practice Susan.  They may be selling promissory notes, an investment product that’s often fraudulent.  It’s a red flag when a product paying a high return is claimed to be guaranteed or insured.  The higher the return, the higher the risk.

Susan: What do you suggest to help me avoid falling for these schemes?

Craig: Skepticism can be your best defense.  Don’t decide on the spot.  Take the time to do your research before you make any decision.  Discuss the investment with a trusted adviser.

Susan: Thanks, Craig.  This is very helpful.  I guess what you’re really saying is, if it sounds too good to be true, it probably is.

Craig: Exactly.  And always make sure the investment product, sales person, or adviser is registered with the Iowa Insurance Division.  You can check toll free at 877-955-1212 or at investsmartiowa.gov.

Susan:  Thanks for taking the time to answer my questions, Craig.  I’ll definitely check out investsmartiowa.gov and, as always, visit extension.iastate.edu and look for ‘Invest Wisely.’

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Updated April 1, 2008