When the economy is weak, con artists come on strong with enticing investment offers. Don't take the bait.

With deposit interest rates low, stocks in a slump, and bonds providing little relief, chances are you may be looking for attractive investment alternatives. But beware! Fraud artists may be looking for you, too, because this kind of economic environment is ripe for investment scams that typically start with offers of "guaranteed" big returns (even up to 100 percent or more), business opportunities and other "no-risk" deals. And while people of any age can be victims of an investment scam, older citizens often are specially targeted. FDIC Consumer News wants to remind readers about investment scams that continue to find victims.

Fraudulent sales of stocks, bonds and other financial instruments: Federal and state law enforcement authorities still find age-old "Ponzi" or "pyramid" schemes, where scam artists promise high returns and use the money of some investors to pay off other investors...until the con artist decides to flee the area and leave some people with nothing but worthless paper. Another common scheme involves fantastic returns based on "secret" or inside information about (nonexistent) investments in financial instruments of elite foreign banks. Also, be wary of investment seminars promising easy money, as many times these only enrich the sponsor.

False or misleading sales of certificates of deposit (CDs): The trusted bank CD issued by FDIC-insured institutions has long been considered to be among the safest financial investments available because of the deposit insurance protection of up to $100,000. However, unsuspecting consumers increasingly are being victimized by criminals or unscrupulous brokers who use improper or confusing disclosure statements or outright fraud. For example, shady brokers have sold elderly people CDs with a very long maturity, perhaps a 20- or 30-year commitment for the investor, by misleading the consumers into believing the CD can be redeemed without penalty after, say, one year. (These refer to "callable" CDs, which only the issuing bank, and not the investor, can redeem early without penalty.) There also have been reports of Internet or newspaper advertisements claiming to offer unusually high interest rates for CDs from banks that investors later learned were bogus.

Promissory note fraud: A promissory note is an interest-paying IOU generally issued by companies wanting to raise cash to finance operations. Investors in these notes tend to be other corporations, not consumers, because a sophisticated analysis is recommended before putting up money. However, criminals have preyed on unsuspecting consumers by offering guaranteed high rates of return on promissory notes that are bogus, often for non-existent companies, and the investor soon discovers that the entire investment is lost.

The "Nigerian scam": This fraud, around since the 1980s, has bilked investors out of billions of dollars and, despite ongoing warnings (including some that have appeared previously in FDIC Consumer News), is alive and well. Here's generally how it works: You receive an unsolicited fax, e-mail or letter from someone claiming to be a foreign government official, business executive or citizen asking for your "help" in one of many scenarios. Perhaps the letter offers a lucrative reward or business opportunity if you allow the perpetrators to "park" funds in your U.S. bank account. But first, you will be required to pay various types of government "fees" and "taxes." For those who comply, their money is gone forever. This fraud is widely known as "the Nigerian scam" because it originated in Nigeria and still flourishes there, but be advised that crooks in other countries are copying it.

How can you avoid being taken by these and other investment scams? FDIC Consumer News asked FDIC fraud examiner Pete Hirsch for a list of common-sense do's and don'ts:

• Be wary of unsolicited investment offers. First, never divulge your Social Security number, bank account numbers and other personal information in response to an unsolicited phone call or letter. Also, be especially skeptical if the sales pitch includes promises of guaranteed profits or yields that far exceed traditional investments. "One thing that virtually all of these scams have in common is that they sound too good to be true," says Hirsch. He adds that if you're being pressured to make a decision immediately, "that's another warning sign that this is probably not an investment for you."
• Deal only with legitimate, reputable marketers. Before sending money or personal information to an unfamiliar person or company, do your research. For example, check whether a broker or company is registered or licensed to do business by the state or federal government, because that gives you additional assurance that the marketer is legitimate. To confirm that a banking institution is legitimate and insured, you can contact the FDIC at the addresses and phone numbers on our "For More Information" page or check our online database of FDIC-insured institutions.
• Get key details in writing, and independently research the investment. For example, before purchasing a bank CD from a broker, you should confirm, in writing: the name of the bank; when the bank can "call" or redeem the CD; when you can withdraw your money without the possibility of a loss or penalty; and what it could cost if you withdraw your money early. "Reputable companies will be happy to answer questions or provide requested documentation," Hirsch says. "If a company won't disclose information in writing, don't invest." Once you have the specifics of a deal, run the proposal by a knowledgeable, trusted third partyÑperhaps an attorney or accountant.