News & Trends

Crooks Pose as Regulators in New Scam Targeting Investors

The bad guys are posing as the good guys in order to scam you out of your money, says the Financial Industry Regulatory Authority, or FINRA, which oversees brokerages in the U.S.

The regulatory agency recently alerted investors to beware of schemes in which financial fraudsters pose as regulators themselves in order to lure victims into phony investment pitches. These scammers are using FINRA's name, logo and even the signature of FINRA CEO Robert Cook in correspondence to trick their targets into believing their proposals are legitimate.

In some of these fraudulent letters, scammers try to create the impression that FINRA is guaranteeing an investment opportunity. In reality, that "opportunity" is actually an advance-fee scam, a type of fraud that lures investors into paying an administrative fee for a promising investment return.

"Financial fraudsters go to great lengths to appear legitimate, making it difficult for investors to recognize their ruses," Gerri Walsh, FINRA's Senior Vice President for Investor Education, said in a statement. "That's why we are telling investors flat out that FINRA does not guarantee investments, and our officers play no role in facilitating investment opportunities. We want people to know that and to understand how they can verify who the real FINRA is."

Another type of scam involves fraudsters posing as FINRA to reimburse investors who had already suffered a loss of money in a previous scam, the AARP reports. One email sent to an investor stated that FINRA wanted to reimburse the victim for losing $160,000 in a previous scam. All the investor had to do was pay $15,000 up front first.

Unfortunately, experts say that those targeted for a scam once are likely to be targeted and become victims again.

"Once you've fallen victim, there is a lot of shame associated with it, and scammers take advantage of that," says Nicole Parshall, an attorney at the Center for Elder Law and Justice. "That's why you're likely to be a victim again. The scammers prey on those who have lost money before."

The best thing you can do to avoid being scammed is hang up on callers with such offers, delete emails and throw away paper offers in the mail.

"If you're unsure whether an investment solicitation is legitimate, do your own independent search for the official number for the government agency, office or employee and call to confirm its authenticity," said Walsh. "Cons lie, and they will lie about their affiliations to convince you to send them money or to collect your personal information."

Report any such offers to the appropriate regulatory agency, such as FINRA, and file a complaint with the FTC.

Read more about other scams here and how to protect yourself from them:

Editorial Disclaimer: Opinions expressed here are author's alone, not those of any bank, credit card issuer, or other company, and have not been reviewed, approved or otherwise endorsed by any of these entities. All information, including rates and fees, are accurate as of the date of publication.
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