Florida investors face hurdles whether they are seasons or new to the scene. Some of these hurdles come from investment fraud schemes. Many experts can detect some of these schemes with ease. But fraudsters change up their tactics and tricks.
To succeed at dodging investment fraud schemes, know what these schemes look like. Today we will examine different types of investment fraud. This will aid in that understanding.
Types of investment fraud
The U.S. Securities and Exchange Commission looks at types of investment fraud. First, understand that there are many types of investment fraud. A few include:
- Internet and social media fraud
- Advance fee fraud
- Pyramid schemes
- Pump and dump schemes
- Ponzi schemes
- Microcap fraud
Some of these tactics are more widely known than others. For example, most people have at least heard of pyramid or ponzi schemes before. Many understand that ponzi schemes work by funding old backers with new investors. Most know why these tactics are a type of fraud.
The dangers of lesser-known schemes
Others on the list are not as well known. For example, microcap stocks are susceptible to stock price manipulation. This makes them an easy target for fraud schemes, but not everyone knows that. It is hard to find reliable information for some of these schemes. Because of that, it is often harder for investors to identify them. This is particularly true of new investors. They do not have as much experience. It is easier for them to get caught up in a scam they cannot identify.
You must take care when investing. Understand popular fraud schemes and scams. Look into the scams that are not as popular. Investing in a reckless way may end up costing you more money than you ever anticipated.