Financial & Investment Scams to Watch Out For

Heather Dueitt, VP Marketing
Heather Dueitt, VP Marketing

The California Department of Oversight (DBO) urges consumers and investors to be alert to scams and unlawful activities in the investment and other financial services industry.

Loan Modification and Foreclosure Scams

Homeowners facing foreclosure should be aware of these common scams:

Deed-Transferring to Third Party – Scammers have told homeowners that by transferring the deed to their home to a third party, they will no longer be responsible for their mortgage payments. This is NOT true. Transferring a title does not relieve a borrower from their mortgage payments.

Intentional Default – Scam artists urge homeowners to not pay their mortgage in order to get a loan modification. While there is no right to a loan modification, the terms and standards for a loan modification are always determined by the mortgage loan servicer – no one else.

Lending Scams

Advance Fee Scams – Avoid advance fee scams in which fraudulent companies promise loans if a consumer pays a substantial up-front fee first.  Do NOT pay anyone asking for upfront/advance fees for loan modification services or mortgage forbearance services.

Investment Related Scams

Be wary of investment schemes promoting cures in connection with the current public health emergency, or other investment opportunities related to the economic downturn.  Schemes may attempt to convince investors to liquidate their savings or sell their current holdings to purchase overvalued assets, assets that come with very high fees or assets of uncertain or questionable value, such as cryptocurrencies or precious metals.

Pension Advance Scams - The scam involves investors who provide funds to make cash advances and pensioners who are willing to turn over future pension payments in exchange for an immediate lump sum cash payment.

Opportunity Zones - An Opportunity Zone is an economically distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. These types of investments are available only through a Qualified Opportunity Fund (QOF). A QOF may invest in property or a business located in an opportunity zone. Investors considering these investments should consult with their qualified tax adviser because of the complex tax implications.

Check Before You Invest

Before investing, check the licensing status of companies prior to transacting business.

How to Protect Yourself:

•    Before investing in any investment, ask questions about the risks and fees involved. Conduct your own independent research or seek the opinion of a financial professional who is registered with your local securities regulator.
•    Never invest in something you don’t fully understand. Do not agree to participate in a general partnership or joint venture if you have no specific experience, knowledge or education in the type of business and would have to rely on others’ expertise.
•    Beware of sales techniques that include repeated phone calls, cold calls, or high-pressure sales pitches hyping the profitability of the deal or promising a sure thing.
•    Do not be fooled by professional-looking websites boasting current productivity levels and profits and featuring photos of new production sites.

 

The DBO encourages consumers to submit complaints if they believe a licensee has violated state law, acted improperly or believe a company or person is conducting unlicensed activity. If the DBO does not have jurisdiction over the matter, they will help direct consumers to the proper regulatory or law enforcement agency. Consumers and investors can submit complaints to the DBO.