FRANKFORT, Ky. (WKYT) – Governor Andy Beshear and Attorney General Daniel Cameron issued a scam alert Thursday warning Kentuckians of the top five financial scams that are likely to trap families in 2020.
At a press appearance, they identified promissory note, real estate, social media and cryptocurrency investment scams along with Ponzi schemes as the top five scams to avoid.
They also offered tips to avoid falling victim to would-be scammers:
Promissory Note Scams: A company or person who publicly markets promissory notes with false promises of high rates of return.
Tip: Know that legitimate promissory notes are not usually sold to the general public. Always research independently and verify the company before making any purchase and know that if someone calls trying to sell you a promissory note, it is likely a scam.
Real Estate Investment Scams: Investment pitches involving property flipping and investments financed through means other than traditional bank borrowing.
Tip: Property flipping financed many ways can be done lawfully, but it can also be a source for fraud. Avoid dealers that urge you to move too fast and take extra steps to make sure your investment is secure and that the broker is properly licensed.
Social Media/Internet-based Investment Scams: Social media-related investments and solicitations are a growing source of concern. Kentucky residents invested at least $1.5 million and many of the solicitations were connected to social media platforms.
Tip: Be wary of unsolicited social media offers or sales pitches as they may likely be part of a fraudulent investment scam. Remember – if it sounds too good to be true, it probably is.
Cryptocurrency-related Investment Scams: Before jumping into the crypto market, know that the financial products are extremely risky and could be nothing more than a scam. The market does not fit exactly into existing regulatory frameworks, making it easier for scammers to steal.
Tip: There are numerous cryptocurrency schemes and it is difficult to stay ahead of all the ways scammers can use the products to scam. Before investing in the market, research online ways to avoid fake markets, phishing websites, scam coins, and in-person transfer scams.
Ponzi Schemes: Similar to pyramid schemes, this scam promises high rates of return with little risk to investors. Con artists claim they can generate returns for early investors by acquiring new investors.
Tip: Avoid any investment where someone offers you a guaranteed return in exchange for an upfront deposit. It is likely a scam.
Information about each of the 2020 investor threats and contact information for all state and provincial securities regulators is available on the North American Securities Administrators Association's website at https://www.nasaa.org/.
The Kentucky Department of Financial Institutions (DFI) also offers a wide range of free investor education materials and can help investors research the background of those selling an investment or providing advice regarding its purchase. Call DFI toll-free at 800-223-2579 or visit the website at http://kfi.ky.gov/Pages/default.aspx for more information.
To file a consumer complaint or to report a scam, Kentuckians can do so through the Office of Attorney General Daniel Cameron here.