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Common Red Flags for Oil & Gas Stock Scams

Investments in oil and gas have been the target of scams for a number of decades, but with the recent high prices of oil, more and more scams have come to light that particularly target older and/or unsophisticated investors. The scams are often unsolicited, high-pressure, and aggressive. Before you decide to believe a salesperson’s pitch that “this is the investment that will make you rich!” assess the situation and look for any warning signs, or red flags, that the opportunity might be a scam.

Red Flags To Watch Out For In Oil & Gas Investment Scams

  • Unsolicited Marketing. If you are receiving unsolicited calls, messages, emails, or materials mailed to your home, concerning a winning opportunity involving an oil & gas investment, approach with caution. Don’t let the glossy marketing materials or fast talking swoon you or impair your judgement.
  • Once In A Lifetime Opportunities. Sales pitches claiming that an investment opportunity is a once in a lifetime deal, may be too good to be true. The same goes for claims that the investment opportunity is “a limited time offer”, “won’t last long”, or is “first-come first-serve”. These tactics are designed to pressure unsuspecting victims into making split second decisions, which they may likely later regret.
  • Promises of High Returns. When a salesperson promises high rates of return that are above and beyond the current returns of other similar oil and gas investments, be weary. Similarly, promises that its a “can’t miss” opportunity, or is “guaranteed” to be a winner should be a clear red flag that something about the offer is amiss since oil, gas, and energy exploration investments are, by their nature, a high risk.
  • Pitches Directed Towards Timely, or Highly Publicized Events. When a salesperson presents an offer related to something that has recently been in the news about a new oil and gas investment opportunity, there is a chance that the salesperson is trying to scam you by jumping on a highly publicized bandwagon. This sales tactic relies on a recent news story for support about the legitimacy of the investment opportunity that he or she is touting.

Claims of “Top Secret” Intel, or Insider Tips. Sometimes scammers attempt to draw in unsuspecting victim investors with exclusive “insider tips”, or “top-secret information” about an oil and gas investment opportunity. The salesperson will swear that the investor can get in on the ground level if they just act now. The salesperson might even discourage the victim from discussing the opportunity with others.

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