Scam Prevention Education Center

Plain-language guides on how financial scams actually work, the warning signs that come before the loss, and where to check a company in public records. Free, and we take no payment from any company we write about.

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Most-asked checks

The four questions people ask us most, each answered step by step.

What is a CRD number?Find and check a CRD number on FINRA BrokerCheck.Read the guide →Is a firm registered?Check FINRA, the SEC and your state register.Read the guide →Is a trading platform licensed?Check apps, brokers and crypto platforms.Read the guide →Is a brokerage financially stable?Check filings, net capital and SIPC cover.Read the guide →

Start with your situation

Four common situations. Pick the one closest to yours instead of reading through everything.

Someone contacted you out of the blue

A call, text, DM, or email about your money. Start with how these approaches are built and what to say.

Read: unexpected messages

You feel rushed to decide

Deadlines, limited slots, and "act now" pressure are the most reliable warning sign there is.

Read: slow down first

You want to check a firm or a person

What public records show, where to look, and what a missing record actually tells you.

Read: how to check

Money has already left your account

What to do in the first hours, who to report to, and why upfront-fee recovery offers are a second scam.

Read: reporting steps

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10 Critical Red Flags

If you spot any of these warning signs, stop immediately and investigate further. These are the hallmarks of investment fraud.

No legitimate investment can guarantee high returns. All investments carry risk. Claims like "guaranteed 15% annually" or "no risk" are clear warning signs.

Scammers create artificial urgency: "This deal closes tomorrow" or "Only 2 spots left." Legitimate opportunities allow time for due diligence.

Most securities must be registered with SEC. Always verify on SEC.gov (EDGAR database) and check advisor credentials on FINRA BrokerCheck.

Investment professionals must be licensed. Verify licenses through FINRA BrokerCheck, SEC Investment Adviser Public Disclosure (IAPD), or state regulators.

Returns that don't fluctuate with market conditions are suspicious. Even the best investors have down periods. Suspiciously steady returns—especially in volatile markets—are a hallmark of fraudulent schemes.

If they can't explain the investment strategy clearly, or claim it's "proprietary" or "too complex to explain," walk away. Transparency is essential.

Delays in accessing your money, excuses for why you can't withdraw, or requirements to "roll over" investments are major warning signs.

Legitimate investments provide prospectuses, contracts, and statements. Verbal-only agreements or vague documents are red flags.

Cold calls, spam emails, or social media messages about investments should be treated with extreme skepticism. Legitimate firms don't cold call.

Claims of "insider tips" or "non-public information" are illegal. Trading on insider information violates securities laws.

How to Protect Yourself

Follow these actionable steps before making any investment decision. Due diligence takes time, but it's your best defense against fraud.

1

Verify Registration

Check SEC's EDGAR database for securities registration
Use FINRA BrokerCheck for advisor licensing and history
Search state securities regulator databases
Confirm company is registered to do business in your state
2

Research the Company

Search company name + "scam" or "complaint" or "fraud"
Check Better Business Bureau (BBB) for complaints
Review SEC enforcement actions and litigation releases
Look for negative news articles or investor warnings
3

Ask Tough Questions

How exactly does this investment make money?
What are the specific risks?
How liquid is this investment? Can I sell it easily?
What are ALL the fees and costs?
Who is the independent custodian of assets?
4

Demand Documentation

Request prospectus or offering documents
Get everything in writing - no verbal promises
Review audited financial statements
Verify third-party custody statements
5

Consult Professionals

Have an independent attorney review documents
Get a second opinion from a licensed financial advisor
Consult with a CPA about tax implications
Never invest based on one person's recommendation
6

Trust Your Instincts

If it sounds too good to be true, it probably is
Don't let pressure tactics rush your decision
Walk away if you don't understand the investment
It's okay to say no - there will always be other opportunities

Check a Firm Before You Send Money

Look up any financial company or adviser and see the public-record signals, licensing details, and red flags we can find.

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How Trust Verification Works

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Who writes these guides

Written and reviewed by the Smart Money Verified Team. We build every guide from primary regulator material, we take no payment from any company we write about, and we say plainly when public records cannot answer a question. Our guides are education, not financial advice.

How we check things: our methodology · disclosures