Cftc Smartcheck Conversation Starter Kit

INVESTMENT FRAUD

CONVERSATION
STARTER KIT
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WHAT IS THE CONVERSATION
STARTER KIT?
While there is no sure way to prevent every type of financial
fraud, one conversation can make all the difference. When
a fraudster targets someone’s retirement savings, or tricks
people into giving up large sums of money for “guaranteed”
or “risk-free” returns, it can be particularly devastating.
It can turn golden years into a daily struggle, and take a
psychological and physical toll1.
Unfortunately, many regulators believe investment fraud
goes undiscovered until it’s too late2. For example, a 2017
survey released by the U.S. Commodity Futures Trading
Commission found only half of Americans would intervene
if they believed a friend or family member was the victim of
financial fraud even though 93 percent of the respondents
believed financial fraud could happen to anyone and 43
percent had been exposed to financial fraud.
Identifying and stopping fraud early can lessen the damage,
and alert officials before additional victims are harmed.
Getting involved, by raising concerns about fraud, shows
friends and family you care. If you’re armed with the right
information, you can also give them the tools they need
to better protect themselves and make more informed
investment decisions.
Talking about money, and especially investment fraud, can
be an uncomfortable and sometimes complex conversation.
But it doesn’t have to be. This Investment Fraud Conversation
Starter Kit gives you what you need to spark a productive
dialogue and empower friends and family with the right
information to spot and avoid fraud.

HOW TO USE IT
This Investment Fraud Conversation Starter Kit includes
a series of questions that will help you prepare for an
investment fraud conversation. The Kit also provides ideas
for breaking the ice and topics to cover, organized by type
of relationship. Finally, the Kit provides a roadmap for taking
the next step to researching investment fraud.

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2

Non-Traditional Costs of Financial Fraud (PDF), FINRA Investor Education Foundation, March 2015
Seniors at Risk From Financial Fraud, North American Securities Administrators Association, August 2017

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QUESTIONS TO CONSIDER
BEFORE THE CONVERSATION
Collect your thoughts before you start the conversation. Consider the best time and place to talk, and whether it would be
helpful to invite others to join the conversation. The approach you take can make the difference in how receptive your loved one
will be to the entire conversation.
Think about the basics.
Why do I believe my relative or friend is being scammed?

Who else should join me in the conversation?

How might my relative or friend respond to me intervening?

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QUESTIONS TO CONSIDER
BEFORE THE CONVERSATION (CONT.)
What do I want to accomplish?

What do I want to be sure to say?

When would be a good time to talk?
Date and Time:

Where would they feel comfortable talking?
Think of a quiet place where the people you’ve contacted can gather, but not feel intimidated.
Remember, you want your loved one to remain comfortable and not feel pressured.

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THINGS TO REMEMBER
Again, talking about fraud, especially investment fraud, can
be a sensitive and uncomfortable conversation. As such,
remember what’s most important: that family and friends
understand you’re coming from a place of love and concern
for their financial well-being.

BE PATIENT
Some people may be too embarrassed or uncomfortable.
Sometimes all they need is a little time to open up to
the topic.

DON’T ASSUME
Ask questions and listen to the full answer before
jumping to conclusions.

DON’T JUDGE OR BLAME
Anyone can become a victim of investment fraud.

BE EMPATHETIC
Show them that you care and try to relate
to their circumstance.

LISTEN
You don’t have to steer the full conversation.
Let it progress naturally.

OFFER TO HELP
If there is resistance to your offer, try other suggestions.

KEEP TRYING
Every attempt at the conversation is valuable.

DON’T PUT IT OFF
You don’t need to have all of the answers to have the
conversation. You just need to know where to start.

BLOW THE WHISTLE
If you know of a violation, or witness suspicious activity,
submit a tip to the appropriate authorities.

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HOW TO START
THE CONVERSATION
When you’re ready to have the conversation, consider these conversation starters to break the ice.

SON/DAUGHTER TO PARENT
RR I don’t want to pry into private matters, but I care about your long-term
happiness and security—and that includes financial security. Can we
have a conversation about the future?
RR How do you feel about your long-term financial outlook?
RR What are your goals for the future? Do you have a financial plan that
will help you get there?
RR How do the assets in your investment portfolio fit with your long-term
financial plan?
RR Do you trade frequently? How much could you lose on these trades?
RR Do you use a financial professional or firm you trust?
RR Do you ever consult financial advisors or websites?
RR Have you checked their background?

PEER TO PEER
RR You’ve seemed anxious about money lately. Is everything OK?
RR How do you feel about your situation?
RR I find it hard to balance short-term needs with long-term
financial planning. Do you have a long-term plan?
RR Who do you go to for financial advice?
RR Do you ever go online to get investment recommendations?
RR How can you tell when a financial site is legit?
RR I read somewhere that financial fraud is on the rise.
Did you know you can run a background check on financial
firms and advisors?

Prepared by the U.S. Commodity Futures Trading Commission’s Office of Customer Education and Outreach for the SmartCheck program.

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HOW TO START
THE CONVERSATION (CONT.)
GRANDPARENT/ELDER
RR I often read about the financial challenges that sometimes come with
retirement. I think it’s important for family to discuss this stuff. Can we
have a conversation about financial matters?
RR How do you feel about your financial situation?
RR When you project your retirement income out for years, does it
seem likely to match your needs?
RR Are you more of a buy-and-hold investor or do you trade frequently?
RR How do you get information about investing?
RR Does your retirement community/other group ever organize
financial seminars or classes?
RR Do you ever get offers or invitations from people wanting to sell you
financial products or advice?
RR Did you know you can check their registration status and background?

RELATIVE/SPOUSE
RR I understand you heard about an opportunity to make
money without much risk. Can you tell me about it?
How does it work?
RR Seems we haven’t had the time to discuss our finances
lately. Can we find a few minutes to chat?
RR How well do you know the person/firm/site you’re
investing with?
RR Did you know you can check the background of your
financial advisor? Have you?

Prepared by the U.S. Commodity Futures Trading Commission’s Office of Customer Education and Outreach for the SmartCheck program.

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KNOW THE WARNING SIGNS
OF INVESTMENT FRAUD
Investment fraud can be devastating. If you’re concerned about a
friend or relative, here are some possible signs that indicate they could
be a victim of investment fraud:

MENTION OF HIGH REWARD WITH NO RISK
Have you heard your loved one bring up a huge money-making
opportunity with zero risk? Remember: There is no such thing as a
zero-risk investment. Typically, high-return investments come with a
high-risk level; and low-return investments come with a low-risk level.

MENTION OF A “HOT TIP”
Sources sharing “hot tips” or “insider information” may not have
an investor’s best interest in mind. If a tip was truly “insider
information” about a public company, it would be illegal to act on
this information. Legitimate advisors rely on publicly available information.

DRASTIC CHANGES IN FINANCIAL BEHAVIORS
Odds are your loved one has some long-established habits—we all do. So, if these change suddenly for no apparent reason,
pay attention. Are they making dramatic withdrawals? Moving money between accounts? If so, look deeper—your loved one
could be on the hook. Talk with your loved one about this new behavior and try to identify the cause.

BEING SECRETIVE ABOUT AN INVESTMENT
Often, fraudsters will tell victims that they shouldn’t talk about the investment with anyone because they don’t want to let
everyone in on the scheme. If this is the case, ask why your loved one was let in on this secret.

FEELING OF PRESSURE TO ACT ON AN OPPORTUNITY
Is your loved one stressing about making a financial decision? Scammers often use high-pressure sales tactics to push
investors to fork over money. If your loved one is faced with a limited-time offer, or pressured to act right away, it may not be
in their best interest.

THE FINANCIAL ADVISOR IS NOT REGISTERED
If your loved one doesn’t know if their financial advisor is registered, run a Check to see using CFTC’s SmartCheck.gov. Most
financial professionals must be registered or licensed with a government regulator or self-regulatory organization. If they are not
registered, this could be a red flag that the financial advisor is a scammer.

TALK OF FOREIGN INVESTMENTS
Beware of any discussion regarding investment deals offered from overseas. Scammers often lure in investors through rhetoric
about appealing foreign investment opportunities that aren’t available in the U.S. Always check the company’s registration status
to see if it’s legit. Generally, all foreign entities that solicit trade in the U.S. are required to register with CFTC.

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CFTC SMARTCHECK
RESOURCE
CFTC’s SmartCheck.gov gives you easy access to free tools
to check the background of financial professionals and stay
informed on the latest fraud schemes. It only takes minutes
to check if a financial advisor is registered.

HOW TO RUN A BACKGROUND CHECK:
1. Visit SmartCheck.gov
2. Select Check page
3. Complete all three searches
4. Review the advisor’s registration status
5. Contact your federal or state regulator with questions

HOW TO REPORT THE FRAUD:

❏❏ U.S. Commodity Futures Trading Commission (CFTC) – For fraud
related to commodity futures contracts, options on commodity
futures, leveraged precious metals, binary options, commodity
pools, foreign exchange, or virtual currencies.

❏❏ U.S. Securities and Exchange Commission (SEC) – For fraud related
to investments, investment accounts, and financial professionals.

❏❏ State Securities Regulator – For fraud related to investments,
investment accounts, and financial professionals.

❏❏ U.S. Federal Trade Commission (FTC) – For business- or consumerrelated fraud or identity theft.

❏❏ U.S. Postal Inspection Service – For mail fraud or lottery scams.
❏❏ State Attorneys General – For general fraud.
❏❏ Local Law Enforcement
ABOUT CFTC SMARTCHECKSM
CFTC SmartCheck℠ is an educational program of the U.S. Commodity Futures Trading Commission (CFTC), an independent agency whose mission is to foster
open, transparent, competitive, and financially sound markets. The SmartCheck program informs investors about tools that help them research the credentials
of financial professionals, uncover disciplinary histories, and stay ahead of scam artists with news and alerts. The program is central to CFTC’s commitment to
protecting investors through robust fraud prevention and investor education.
Have a question about CFTC SmartCheck? Email us at [email protected]. Learn more about CFTC SmartCheckSM on Facebook at facebook.com/CFTCSmartCheck
or Twitter at twitter.com/CFTCSmartCheck
This kit was prepared by the U.S. Commodity Futures Trading Commission’s Office of Customer Education and Outreach. The kit is provided for general informational purposes only
and does not provide legal or investment advice to any individual or entity. Please consult with your own legal adviser before taking any action based on this information.

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NOTES

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