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17 Ways to Protect Yourself from Investment Fraud
Investment fraud can happen to anyone—from first-time investors to seasoned professionals. As securities fraud lawyers at Israels & Neuman, PLC, we’ve seen countless cases where people lost significant savings simply because they trusted the wrong person or didn’t know what to look out for.
Sadly, every day we receive heartbreaking calls from people who had their money stolen by someone overseas, and in many cases, there is simply no way to recover those funds. That’s why we created this 4-part blog series:
1. 17 Ways to Protect Yourself from Fraud
2. Common Fraud Schemes to Watch Out For
3. How to Tell if You’ve Been a Victim of Fraud
4. What to Do If You’ve Been Defrauded
Nothing would make us happier than stopping fraud before it happens. We hope this guide helps protect you and your loved ones.
1. Always Verify That You Are Dealing With a Licensed Professional
Before investing any money, check the individual’s credentials using FINRA’s BrokerCheck or the SEC’s Investment Adviser Public Disclosure tool. These can reveal if someone is properly licensed and whether they’ve had complaints or disciplinary actions. Also, do a basic online search. Look for reviews, business locations, and anything else you can find. Be especially cautious if someone has a very limited online footprint.
2. Meet With Them in Person When Possible – and Get Everything in Writing
Fraud is more likely when interactions are limited to phone calls, emails, or messaging apps. An in-person meeting gives you a better sense of who you’re dealing with. Also, real financial firms require you to complete a large volume of paperwork to open an account. If you’re not signing multiple documents before sending funds, that’s a red flag.
3. Talk to Your Family About What You’re Doing
Sometimes, the best protection is simply a second opinion. Tell trusted friends or family members about any investment you’re considering—especially if it seems complicated or high-risk.
4. Avoid High-Pressure Sales Tactics and Artificial Deadlines
If someone tells you that you’ll “miss out” unless you invest right now, walk away. Real investment opportunities don’t vanish overnight.
5. Do Not Trust Anyone You Meet Through Social Media or WhatsApp
Legitimate financial professionals don’t pitch investments over social platforms. If someone contacts you out of the blue via WhatsApp, Instagram, or Facebook—it’s almost certainly a scam.
6. Make Sure Your Investments Are Held by a Reputable Financial Institution
Your money should be held by a known custodian like Charles Schwab or Fidelity—not by the person selling the investment. You should have independent, direct access to your account online. Also, be cautious of anyone who doesn’t have a legitimate business location or isn’t affiliated with a recognizable firm.
7. Be Cautious If You Don’t Understand the Investment
If the person pitching it says it’s “too complicated to explain,” that’s a red flag. Good advisors should be able to explain the basics in plain English.
8. Watch Out for Promises of High Returns with No Risk
Be skeptical of investments that sound too good to be true. Generally, no legitimate investment offers large, steady returns without any risk.
9. Insist on Regular Statements from a Third-Party Custodian
You should receive official statements directly from the financial institution holding your money—not spreadsheets or PDFs created by the advisor.
10. Don’t Invest When You’re Emotional or Distracted
Scammers target people who are going through grief, stress, or major life transitions. If you’re feeling vulnerable, take your time and talk things over with someone you trust.
11. Be Mindful of What You Share Online
Scammers often use social media to gather information. Avoid sharing details about your finances, recent inheritances, or emotional hardships online.
12. Monitor Your Investments and Ask Tough Questions
Insist on regular reports and keep an eye out for unauthorized or excessive trading. If something doesn’t feel right—and you’re getting vague answers—report it to your state’s Securities Division.
13. Watch Out for People Who Prey on Fear
Many fraudsters sell their schemes as a way to eliminate your financial worries. Fear (and greed) can cloud good judgment—stay grounded and ask questions.
14. Good Manners Don’t Equal Integrity
Con artists are often extremely polite and personable. They count on your good manners to keep you from cutting them off or challenging them. Trust your gut, not their charm.
15. Be Especially Cautious If You’re New to Investing
If you’re unfamiliar with financial terms or strategies, don’t be afraid to ask questions—lots of them. If the salesperson can’t explain the investment in everyday language, walk away.
16. NEVER Share Personal Information With Unverified Callers or Emails
If someone claims to be from a reputable financial institution and contacts you out of the blue, don’t give out your information. Instead, look up the institution’s real phone number and call them back directly to verify the contact. Better yet, call someone you know at the institution and tell them about the call. Scammers often spoof phone numbers and caller ID to make themselves look legitimate—be very, very careful.
17. Be Very Careful With Cryptocurrency.
Cryptocurrency scams and fraud are everywhere these days. We have seen everything from pump and dump schemes to outright theft. Cryptocurrency investments are not appropriate for all people and need to be approached with caution. If you have never invested in cryptocurrency, talk with a licensed financial advisor or broker about how to get into the crypto space through legitimate investments, such as ETFS, which are marketed and sold by large institutions.
Final Thought:
Investment fraud thrives on secrecy, confusion, and misplaced trust. Taking these simple steps can dramatically reduce your risk of becoming a victim of fraud. If something doesn’t feel right, trust your instincts—and don’t hesitate to contact a qualified investment fraud attorney. The attorneys at Israels & Neuman always provide a free and confidential consultation and we represent clients in all 50 states.