Law about consumer financial problems
An Equity-Indexed Annuity (“EIA”) is a financial product from insurance agencies that offers a minimum guaranteed return combined with a return linked to a market index. EIAs involve an “accumulation period,” when an investor makes a lump sum payment or a series of payments to the insurer, and a period following the accumulation period when the insurer makes a lump sum payment or a series of payments to the investor.
Internet fraud refers to schemes in which individuals or entities use online tools to deceive investors, often by presenting false, misleading, or manipulated information about investment opportunities.
Some companies pay people to write online newsletters recommending their stocks, which are referred to as investment newsletters. Federal securities laws require the newsletters to disclose who paid for their product, the amount, and the type of payment.
Financial seminars are a marketing tool often used by broker-dealers and other entities to attract prospective clients. These seminars may be invitation-only or they may be advertised in local papers or on the internet. Financial seminars are often held at hotels or restaurants and may offer enticements such as free meals, books, or trips for attendees.
"Pump and Dump" is a type of stock fraud involving the use of false or misleading statements to increase stock prices and then sell the inflated stocks to the public.
Financial advisors may be designated “senior specialists” in order to imply a certain level of training and expertise regarding issues of importance to senior citizens. The Consumer Financial Protection Bureau (CFPB) reports that there are currently more than 50 such “senior designations” or “titles” being used by financial advisors, which is “extremely confusing” for consumers. A full copy of the CFPB report can be read at consumerfinance.gov.
Named after Charles Ponzi, who infamously bilked investors out of millions of dollars in the 1920s, a Ponzi scheme is an investment scam that involves the payment of abnormally high "returns" to investors that are actually paid from money contributed by newer investors.
Prime bank fraud is a type of investment scheme that promises extremely high yields over a short period of time. Individuals claim that they have access to secret financial products which they can buy at a discount and sell at a premium. In reality, these financial products are fictitious. Individuals attempt to make these products seem legitimate by associating them with top world banks or secret government banking systems for the elite.
In a promissory note scam, the individuals perpetrating the scam often stay behind the scenes. They persuade others to sell promissory notes by promising them large commissions. The individuals who sell the promissory notes to investors often rely on the information they have been given, and they may not know that the information is false or misleading. The individuals perpetrating the scam use a portion of the money they collect from investors to pay the sellers their commissions.
A pyramid scheme is an unsustainable, illegal business model where investment returns are typically from the principal of investments or membership fees instead of from the underlying investment gains. It is often marketed as a foolproof way to turn a small amount of money into big returns.
