Fraud Prevention for Investors
There are fraudulent people, posing as legitimate investors, and they often prey on an entrepreneur's fund-raising efforts. This is a time when you're most vulnerable, and it doesn't matter what site you're on, someone is willing to prey on you. While BDL - BizDeLite is doing all we can to prevent fraudulent investors from entering the site, there are some things you need to watch for. (Keep in mind these tips are merely guides to help reveal potential danger. There is a possibility legitimate investors may or may not follow some of these practices.) With the following tips, you can better prepare yourself to avoid future situations of fraud.
Don't Invest in Anything Based on Appearances
Just because an individual or company has a flashy web site doesn't mean it is legitimate. Web sites can be created in just a few days. After a short period of taking money, a site can vanish without a trace. Don't judge a person/company by their web site.
Do Your Homework
Don't invest in anything you are not absolutely sure about. Do your homework on the investment to ensure that it is legitimate. Do your homework on the individual or company to ensure that they are legitimate.
Research, Research, Research!
Check out other web sites regarding this person/company. If this is your dream or company, you owe it to yourself, to do the due diligence of really digging deep. If you care, the deal can wait a week until you find out how valid they are.
Be Cautious of Special Investments
Be cautious when responding to special investment offers (especially through unsolicited e-mail). Inquire about all the terms and conditions. Ask about every detail, and get every official paper they have. If they're willing to fund you, they're willing to go the extra mile for your sound mind.
And the last Golden Rule - If it sounds too good to be true it probably is!
Beware of Foreign Funding
The Sophisticated Nigerian 419 Scam is one such scam. Beware of any international “firm” which requires a “fee” to be sent through a wire transfer to a foreign bank. The FBI warns against this and other similar scams. Take a moment to familiarize yourself with other scams where you could be targeted. (http://www.fbi.gov/cyberinvest/escams.htm).
Guard Against Unaccredited Investors
An accredited investor, according the U.S. Securities and Exchange Commission is one who:
A bank, insurance company, registered investment company, business development company, or small business investment company; has an individual net worth of or joint net worth with spouse, that exceeds $1 million at the time of purchase a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year a trust with assets in excess of $5 million, not formed to acquire the securities offered, whose purchases a sophisticated person makes.