The Expert Podcast

So how can you tell if a website or an investment deal is a scam or if it's legitimate? Well, there are a few things that you want to make a checklist of.

Number one, before you send any money to any investment scheme that claims to offer big returns on your money, you should double it in two months or whatever it is, even if it's a small amount of money. First,  verify their physical address. Look at their website; make sure they have one. If it's all done by social media, if it's all done by email, Snapchat, or anything else, then it's probably not going to be legitimate. But if they have a website, look at the physical address on the website, the street address. Go to Google Maps or Google Earth and see what that address is. Is it a PO Box? Is it a USPS store? Is it some kind of virtual mailbox store? Even if it's an office building, make sure that that building does not have inside virtual offices. Sometimes people will make it look like it's an actual building, but it's not.

Also, look to see if there's a company listed with that name in the Secretary of State's record for that state. Corporations are filed with the Secretary of State. You can make sure it's a corporation. 90% of scams don't have any corporations or addresses. Now, there's some that take it to the next level, and they form a corporation, they have an address, and they're still a scam. How can you find those out?
Well, here's what you do. At first, send them a small amount of money—an amount you can afford to lose—a few hundred or 500. In most cases, these scams will start out by asking for a small amount of money, and then what happens is they keep asking you for more and more, and then eventually they wipe you out. But at the early part, send in that small amount of money, and they're going to send you back a return statement that says, "Look, you sent in $450. Look how much money you made. Right now your account has $1,000 in it. You made a big profit, congratulations." And then they're going to ask you for more money.

So what you do then is tell them that you want to do a withdrawal. You made a thousand; let me take out 300, make it a little bit less than you sent them, and see what they do. Many times they'll tell you you have to pay tax, you can't withdraw, there's fees, and there's penalties. That tells you right there that it's a scam. You'll probably be out of the money that you put in—that 450—but at least you won't send more.

The third way to tell if it's a scam is to ask them if they are an SEC-registered security. Most types of investments have to be registered securities, and if they are, tell them to give you their documentation to look it up and who the principals are, who are the actual people. One of the first things we have to do many times when there's a scam or a fraud is to do an investigation to find out who the actual people are. They use fake names, fake addresses, fake emails, and fake phone numbers. So if you can get the actual name of the principal, the owner, and the manager of the company and look them up on LinkedIn to make sure they're legitimate, that will prevent you.

Doing those three things will prevent 90% of all fraud losses, and you want to prevent them. We talk to dozens of people every single day who have lost money in these frauds and scams, these Ponzi schemes, and these fake crypto schemes, and the story is all the same. "I sent them a small amount of money—5, 100, 1,000—and they sent me a statement that says, 'Oh, your money doubled in three weeks, but if you put in more, you might even make more profit.'"

If you're a victim of fraud, I bet some of this story sounds familiar. And then gradually they'll show more profits, they'll show more income, they ask for more money, maybe they ask for money for taxes, and eventually, once you start getting either you're out of money to give them, don't have any more, or you're starting to get a little bit suspicious, they disappear or they don't answer your questions, or they ask for even more money and threaten if you don't send it, they're going to erase your account. You don't want to be in that position.

How do we know? The people we talk to are in that position; they are in great despair; they have lost tens of thousands, hundreds of thousands, sometimes seven figures; and sometimes they've borrowed money from relatives to put into these scams. You may not think you'll fall for it, but these are highly professional people, in many cases, who have fallen for it. You have to remember that these scammers do this for a living. They know exactly what to say and how to say it, and they fool the most sophisticated people. But if you follow those three steps: address, physical address, ask for a withdrawal, and find out the names of the principals, it'll prevent you from being in that position where you've lost all your money.