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Oil and Gas Fraud: Red Flags for Investors

Oil price volatility is back in a big way as the global economy tries to dig its way out of COVID-19 shutdowns. Business reopenings are driving demand, which, when coupled with controlled production cuts by OPEC, could send oil prices higher in the latter parts of 2020. Not surprisingly, a volatile environment with rising prices is likely to attract scam artists and unscrupulous investment advisors soliciting money from unsuspecting investors.

If you are presented with a supposed investment opportunity in oil and gas that sounds too good to be true, it probably is. Learn to spot the potential red flags of fraudulent oil and gas investment scams and protect yourself from serious financial damage.

  • Sales pitches centered on current events — Fraudsters frequently use the news of the day, such as headline-grabbing stories about oil prices or developments in the Middle East, to make themselves sound authoritative and trustworthy.
  • Promoting “can’t miss” oil wells — Scammers often tell would-be investors that a new oil or gas drilling project is about to get started in such an oil-rich new spot that they’d be foolish not to invest. They might use language that virtually guarantees big returns. Remember, there is no such thing as a sure thing in investing.
  • Unsolicited communication — From spam emails to phone calls to fancy, legitimate-looking brochures, scammers use all sorts of marketing tactics to reel people into oil and gas investments. Hang up the phone, throw away the brochures and don’t allow yourself to be overly intrigued by glossy marketing materials from people you don’t know.
  • Temporary or limited-time opportunities — Fraudsters may present their “opportunities” as something you have to take advantage of right away so you can get in on the ground floor. They do this hoping to get money from you before you have a chance to research the company. Never invest in an oil and gas opportunity before taking your time and thoroughly checking the details.
  • Big returns — Beware of anyone who promises potentially huge returns without a lot of risk. Of course, there are investments out there that beat the market, but even the best stock pickers, over the long term, almost never get bigger returns than the market indexes.
  • Secrecy — If a sales person tells you to invest your money without first talking to your family, attorney or accountant, end the conversation. Scammers don’t want you talking to anyone else because doing so raises the likelihood that someone will recognize the fraud attempt.

Awareness of these oil and gas investment fraud red flags can save you money and headaches. Again, never invest your money because someone else says you should. Always do your research and speak with your advisors first.

The Law Office of Paul R. Clevenger in Dallas represents victims of oil and gas investment fraud throughout Texas. If you need to speak with an attorney about investment losses, call me today at 469-212-9764 or contact my office online.

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