An Inside Look at the Common Tactics
Thanks to the Financial Industry Regulatority Authority for identifying the following tactics.
- The "Phantom Riches" Tactic—dangling the prospect of wealth, enticing you with something you want but can't have. "These gas wells are guaranteed to produce $6,800 a month in income."
- The "Source Credibility" Tactic—trying to build credibility by claiming to be with a reputable firm or to have a special credential or experience. "Believe me, as a senior vice president of XYZ Firm, I would never sell an investment that doesn't produce."
- The "Social Consensus" Tactic—leading you to believe that other savvy investors have already invested. "This is how ___ got his start. I know it's a lot of money, but I'm in&mdashand so is my mom and half her church—and it's worth every dime."
- The "Reciprocity" Tactic—offering to do a small favor for you in return for a big favor. "I'll give you a break on my commission if you buy now—half off."
- The "Scarcity" Tactic—creating a false sense of urgency by claiming limited supply. "There are only two units left, so I'd sign today if I were you.
- End the conversation: Practice saying "No." Develop a script that you can easily remember to say no. Such as: "I am sorry, I am not interested. Thank you." And then hang up.
- If you’re interested, ask questions: A legitimate investment professional must be properly licensed, and their firm must be registered with the Washington Department of Financial Institutions (DFI). Ask if they are licensed and if the investment they are selling are registered with DFI.
- Verify the license and registration: Verify that the individual selling the investment is licensed and that the product is registered by contacting DFI 1.877.RING DFI (746-4334). You can also ask if there are any complaints against the individual and what the subjects of those complaints may be.