Broker Scam is also known as Impersonation Scam

 

Broker scams are not new in the town, but they have new variations every day. According to a report published in February 2021 by the Scam recovery agency, it was observed that Broker scams are now more cyber-related, fraudsters creating fake websites using the names and professional details of real-life industry professionals. 

These professionals are unknown to the imposter websites and apps. And in recent times, the FBI and Securities and Exchange Commission have issued a warning about the problems.   

A broker scam is one of the oldest scams, and no one can spot it until and unless someone falls for the fraud. So here are the two most used patterns to watch and six tricks to spot the fake out there.

Imposter Websites

The fraudsters that control the broker imposter websites have the name and publicly available professional details of a registered investment professional. 

They use this information to set up a fake website. The fraudsters direct potential customers to imposter websites via calls and emails. The main goal is to mimic genuine websites to acquire existing or potential clients' personal information or login credentials.

Investors can easily find mistakes on these websites, such as misspellings, poor grammar, awkward or odd phrasings, or misuse of investor terminology. However, these signs are just the tip of the iceberg, and investors should go in depth a check for the website's registered representative's name as the domain name for the website (e.g., thefabricshome.com). 

Imposter Documents

One more type of broker scam involves an unregistered individual impersonating as a registered professional to trap budding investors. Again, for example, the scammer creates a fake version of a public investment agency and reports as a legitimate broker. Some of these scammers also pick up an experienced broker with a spotless regulatory record.

The modified report by the Broker is emailed to potential "clients" using the name and CRD number of a registered investment professional, and the twist is that the company is not registered as a broker-dealer with an investment agency. The plea includes different documentation and a photo of their driver's license and other personal information.

 

Here is a list of the red flags that you should spot on the doctored report:

Get these six tips fixed in your brain to keep your capital and personal information safe from broker scams. 

Find the source

Scam recovery agencies have always encouraged investors to "check and ask" by using Broker reviewing websites before you invest with an investment professional. Never assume that information received is legitimate. 

We recommend you directly go to the source that will give you legitimate information to produce these reports, including various public investment agencies, the SEC's Investment Adviser Public Disclosure, and state registration databases. You have to search both firms and professionals by name and registration number, also known as a CRD number.

Look at things that are out of place

Always compare the reports and documentation handed over to you by an individual or firm soliciting your business with the actual reports you receive from a background check conducted by you or your source. 

The scammers always have a typo, and they are very easy to spot in the original and fake. Let's take the example of a recent scam where the scammer used a different font than the fonts used in another part of the report, items were just pasted into the paper, and the state of the department's office address was not included in the list of states where the individual was licensed.

Use the internet to verify the information

Stop, think, take your time and use a standard search engine to search the name of the individual approaching your business and the firm name, and be fascinated by the search result. Now you can check if it is the same information provided to you, you can also check the contact information. 

If there is even a tiny doubt you can do some more searches, these searches might include the geographical search of the given address or a verification check on the phone number. We recommend you use reliable sources that can help you verify whether the phone number or website detailed in the firm's Client Relationship Summary (CRS) matches. If you are using LinkedIn for a background check, note that the scammers copy information from a registered person and create a legitimate-looking LinkedIn profile.  

Verify before sending

Never send your money or personal information to a non-verified person. Until the contract has been verified, be very cautious before sending money or personal information, such as your passport, driver's license, date of birth, social security number, or bank account information.

Personal Contact Information is valuable.

Scammers sometimes lure you into sending money or personal information to a personal email address (not a firm) or call you from phone numbers that are not of any listed financial firm. The golden rule is if you invest through an account at a financial firm, use legitimate reviewing websites to verify that the firm is registered, and always send the deposits in the name of the financial firm. 

If an individual comes to you with an investment opportunity and wants you to write a check directly to him, your mind needs to think twice.

Conclusion- Look out for red flags

Scammers leave a lot of red flags in their paths, such as unregistered products, guarantees, high returns that are overly consistent, missing documentation, complex strategies, pushy salespeople, and account discrepancies. The majority of investment professionals are trustworthy individuals, and everything always has exceptions. 

You sometimes do find deceptive entities who take advantage of your trust. We recommend you to learn persuasion tactics used by con artists and always exercise healthy suspicion. For instance, be cautious of sales pitches that make excessive claims about performance. It is a huge red flag.

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