The U.S. Securities and Exchange Commission has shut down ZeekRewards.com, a penny auction website based in Lexington, on suspicion of selling unregistered securities, acting as a Ponzi scheme (where a promoter uses money from later investors to pay earlier investors) and operating a pyramid scheme (where promoters promise large profits if new participants are recruited into the program).
Here are a few tips to help investors avoid being scammed by fraudulent investment or business opportunities:
--Check to see if a company is registered to do business in North Carolina. Securities firms, stock, brokers and investment advisers generally must be registered with the N.C. Secretary of State's Office.
--Been scammed? Watch out for reload scams, which are offers to help make back money lost to a previous scam or bad business decision. The N.C. Attorney General's Office said companies touting opportunities for former Zeekler customers have popped up this week.
--Be skeptical of claims of high earnings, guaranteed earnings or overly consistent returns. Any investment that provides steady returns or goes up month after month, especially when markets are turbulent, should raise suspicions.
--Don't be fooled by claims that investors can make "thousands per week" or a "six-figure income" or by boasts that a few top performers can make a lot of money.
--Be wary of complex strategies. Professional brokers should be able to explain clearly and simply how an investment makes money and what the risks are.
--Be especially cautious if the company is focused on recruiting new members and selling products or services to them -- not customers -- as they join.
--Be cautious of a pushy salesperson: No reputable investment professional should push a potential investor to make an immediate decision because others are investing or that the deal is only good for a limited time. Don't be pressured into making major decisions or purchases. Words such as "limited offer" "risk free" or "special opportunity, but you must keep it secret" should raise concerns.
--Watch for account discrepancies or missing documentation. Statements should accurately reflect account activity consistent with your instructions. Stocks and mutual funds are required to have a prospectus, and bonds must have an offering circular.
--If you don't understand what's being sold, don't buy it. And if it sounds too good to be true, it probably is.
--Financial Industry Regulatory Authority, which offers a free Broker Check to do research on individual brokers and investment advisers as well as brokerage and investment adviser firms. Visit www.finra.org.
--N.C. Attorney General's Office's Consumer Protection Division at (877) 566-7226 or www.ncdoj.gov
--Better Business Bureau. The Greensboro office is at 852-4240 and greensboro.bbb.org.
Sources: N.C. Secretary of State's Office, N.C. Attorney General's Office, Financial Industry Regulatory Authority
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