The Latest Scams Circulating the Consumer World. Be warned. Be informed.
September 2005
Promissory Note Scams
A promissory note is a kind of 'IOU' promising repayment of an investment plus a fixed annual interest rate.Victims of promissory note scams have lost all of their money in what they believed were safe investments with high rates of return.
Promissory notes can be legitimate investments, but usually these notes are sold to private investors and not to the general public.If someone knocks on your door or calls you about a promissory note, most likely it is a scam.
What makes it difficult is that the person selling you the investment may not be the con artist behind the scam.Fraudsters contact independent life insurance agents to sell the promissory notes on their behalf by offering the agents 20 - 30 % commissions.After the agent sales the promissory notes, the con artist pays the commission but gets away with the investor's money.
Play it Safe
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Be skeptical of unrealistically high returns or “risk free" returns.
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Compare the rate of return to long-term Treasury bonds, or FDIC-insured certificates of deposit.
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Watch out for promissory notes that are "insured" or "guaranteed," especially if by foreign insurance.
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Make sure the seller is licensed to sell securities in your state by calling your state securities regulator.Insurance agents can't sell securities - including promissory notes - without a securities license.
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Find out whether the investment is registered with the SEC or your state securities regulator.
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