|Government Warns of Iraq War-related Scams|
Even as the timeline to a possible war with Iraq ticks down, the U.S. Commodity Futures Trading Commission (CFTC) is warning consumers of companies making bogus claims of profits from commodity futures and options trading based on the possible effects of war.
According to the government watchdogs, the suspect companies lure consumers into investing by claiming that a war with Iraq will drive up future prices of heating oil, gasoline and other expendable commodities.
Too Good to be True, Usually Is
In reality, warns the CFTC, the sales pitches are false. "In reality, the prices of commodity futures and options contracts already take into account all known or predictable market conditions, such as changes in demand for a commodity or known shortages of a commodity or problems in production or delivery of that commodity due to major events in the world."
The CFTC issued this Advisory after receiving several reports of companies attempting to take advantage of the extensive media coverage of the Iraq situation. Consumers are advised to watch for the warning signs listed below, and to take precautions before placing their funds with any company that offers leveraged or financed commodity transactions:
- Avoid any company that predicts or guarantees large profits because of
well-known current events, published reports or predictable, seasonal
changes in demand.
- Stay away from companies that promise little or no financial risk.
- Carefully scrutinize unsolicited phone calls and e-mails about
investments, especially those from out-of-state salespersons or companies
with which you are unfamiliar.
- Be wary of high-pressure efforts to convince You to send or transfer cash
immediately to the firm via overnight shipping companies, the Internet, by
mail, or otherwise.
- If you are suspicious, contact the CFTC, the National Futures Association,
your state attorney general's office of consumer protection, or the Better
Business Bureau prior to trading.
- Be sure you get written documentation about the product, the company, and
its track record, in order to verify the data.
- If you can, before doing business with any company, check the company's
materials with someone whose financial advice you trust
- If in doubt, do not give money to anyone. If you can't get solid information about the company and the investment, you may not want to risk your money.
If You Have Been a Victim
Consumers who believe they are aware of, or have been the victim of individuals or firms operating in violation of the antifraud or other provisions of the Commodity Exchange Act, should file a customer complaint through the CFTC's Reparations Program.
The CFTC Reparations Program resolves disputes between commodity customers and commodity professionals. Through this program, you may be able to institute "reparations" proceedings against commodity professionals registered with the Commission if the individuals or firms allegedly violated the antifraud or other provisions of the Commodity Exchange Act.
About the CFTC
The Commodity Futures Trading Commission (CFTC) was created by Congress in 1974 as an independent agency with the mandate to regulate commodity futures and option markets in the United States. The agency protects market participants against manipulation, abusive trade practices and fraud.