Scam artists use psychology to feign legitimacy -
There are many types of investment frauds.
Two of the better known are the Ponzi scheme and the pyramid scheme.
Bernie Madoff became wealthy running his alleged $50 billion Ponzi scheme.
Madoff fooled sophisticated institutions and individual investors.
On a smaller scale, Denver advisor Shawn Merriman has admitted to bilking 38 investors out of $20 million.
Scammers attempt to make their pyramid schemes look like legitimate multi-level marketing programs
Scam artists are masters of psychology and persuasion.
They cleverly discover what makes their targets tick and tailor their pitch accordingly.
They operate somewhat like fortunetellers by asking seemingly benign questions to get to know their targets
Scammers use a variety of tactics to convince targets of their legitimacy.
A common tactic is convincing the victim of the wealth that awaits by investing in the program.
A 2007 survey by the FINRA Foundation examined how known investment fraud victims differed from non-victims.
The survey identified several key risk factors including:
> Inability to spot persuasive tactics used by scammers.
> Relying on friends, family, and co-workers for advice.
Seventy percent of the victims made an investment based primarily on the advice of relatives or friends.
> Being receptive to new investment information.
Three times as many victims attended a free investment seminar than the national average.
> Failing to check the background of an investment or salesperson.
Source: coloradoan.com
The topic is: Mortgage Scams
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