The four Best Threats to Buyers in 2022


9nong /

The stock market just posted one of the best three-year runs of the last half century. Many investors are likely expecting the party to continue.

However, this is not the time to be lulled into complacency. Investing is always a risky business. In most cases, these dangers are associated with the ups and downs of market performance.

But scammers can also make investing more dangerous than it needs to be. Recently, the North American Securities Administrators Association (NASAA) announced what it believes are the top four threats investors will face in 2022.

Read on to learn more about these risks and how to prevent them from draining your wallet.

Cryptocurrency Related Investments

Cryptocurrency BitcoinCoyz0 /

Cryptocurrencies have been the trending investment for a number of years. Some people have made a lot of money investing in these virtual forms of payment.

But NASAA says this type of investment could be riskier than you think. In a press release Joseph P. Borg, director of the Alabama Securities Commission and co-chair of the NASAA Enforcement Section Committee, says:

“By far, the securities regulators at NASAA have demonstrated that investments related to cryptocurrencies and digital assets are our greatest threat to investors.”

Borg notes that alongside a number of stories in 2021 about those who made money investing in crypto, there were many other stories about those who “bet big and lose big.” He says the latter trend is likely to continue in 2022.

NASAA warns that cryptocurrencies are often not well regulated and are ripe for scams that involve “public fronts on pyramid schemes and other scams.”

promissory notes

promissory notealexskopje /

A promissory note is a written promise to pay the holder a specified amount of money at some point in the future. In general, these notes are legitimate. But the concept also attracts scammers, who know the promise of high returns is enticing to some people, particularly seniors who need the cash.

Typically, franchised securities sellers sell promissory notes to the general public. But scammers also use these tools to scam unsuspecting investors. NASAA warns you to beware of promissory notes with a maturity of nine months or less. Such debentures generally do not require federal or state securities registration.

Social Media and Internet Investment Scams

Social media manager on laptopSong_about_summer /

Thanks to the Internet, we are more connected than ever before. But such links also make us vulnerable to fraud.

Scammers use social media platforms like Facebook, Twitter, and LinkedIn to build trust with users before pouncing on new victims.

In many cases, scammers use online profiles to obtain personal information such as dates or places of birth, phone numbers, home addresses, and even personal photos. The crooks then use this information to create highly specific pitches for members of the social network.

NASAA warns you to be wary of pitches that:

  • Promise high returns without risk
  • Involvement of offshore operations
  • You need to open an e-currency account
  • Recruit your friends
  • Present professional websites with little to no information
  • Do not provide you with written information about the risks of investing and procedures to get your money out

Self-Administered Individual Retirement Accounts

Roth IRAMikhail Petrov /

As such, self-directed IRAs are fine. This type of retirement vehicle lets you invest money in things beyond stocks, bonds, and mutual funds. For example, some people use a self-directed IRA to invest in real estate.

But NASAA says some scammers use self-directed IRAs, or SDIRAs, to target retirees. According to the association:

“State regulators have recently filed several multi-state lawsuits against parties who use the alleged legitimacy of SDIRAs to defraud the public, including the case brought jointly by 30 states and the CFTC against several precious metals traders in Los Angeles.”

In this case, scammers targeted $185 million from 1,600 mostly older investors, “including more than $140 million that came directly from retirement accounts,” says NASAA.

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