Investment fraud occurs when you participate in an investment someone else falsifies. In many cases of investment fraud, the investor targets a specific group, such as a certain ethnic or religious group, to build trust and momentum for the scheme. 

Since 2014, the U.S. Sentencing Commission states that cases of securities and investment fraud have decreased by 10.1%. But you should still remain wary about potential fraud and understand the signs of a fake investment. 

1. The promise of exorbitant profits

Most investments do not garner astronomical profits within a short period of time. If the investment sounds too good to be true, it likely is. 

2. Minimal or no risk

Most investments present some level of risk. If the investor promises you a guaranteed return, you have reason to be suspicious. 

3. High-pressure sales tactics

Many ads for fake investments feature sales pitches that urge you to act quickly or get in on the ground floor. Avoid making investments quickly or purchasing them right away because it will be too late the next day. Promoters will often offer to pick up your check within the day, so you do not have time to review the documentation, think about the terms and do your research. 

4. Inability to receive information

When presented with the investment, the person in charge may not want you to ask questions or get more information. In response to your questions, the investor may respond with additional questions designed to provide a positive answer from you.