The following ways to avoid scams are suggested in "Investor Alert!" a book published recently by the Council of Better Business Bureaus and the North American Securities Administrators Assn.:
Be wary of promises of high returns in a short time and claims that risk is minimal.
Doubt "inside information" that gives you an advantage over other investors. Worry about evasive answers and secret formulas.
Always demand written information about a company, but remember that such documents can be easily falsified.
Be suspicious of unexpected calls, letters or visitors touting investments, particularly when accompanied by high-pressure sales tactics.
Look out for substantial initial investment costs.