Afriend of mine, a woman with some good sense, told me about a couple who had been persuaded to buy dinars, the Iraqi currency, as a great investment.

I thought she was joking and started laughing. But she was serious.

Investing in foreign currency can be a legitimate way to make money. But it is not for the average investor. And certainly not appropriate for unsophisticated investors.

Yet schemes like this will snare a lot of people looking for a winner in the weak market conditions in the US and abroad. Unsuitable investment pitches and straight-out cons will increase in weeks to come as stock markets continue to wobble.

It is high season for opportunistic scams and con artists who use news headlines to snare their victims.

"There is one thing that investors can always count on," says Karen Tyler, North Dakota securities commissioner and president of the North American Securities Administrators Association (NASAA). "Financial predators and ethically challenged salespeople will exploit the headlines and use investor fear to make the next sale or execute a fraud."

Crooks just wait for periods like this when investors panic. Panicky people are easy pickings for schemes that appear to be safe alternatives to investing in a declining market for equities.

"We have weakening economic conditions and Wall Street's collective miscalculation of risk driving stock market volatility, so it's understandable that investors may begin to second-guess their investment decisions," Ms. Tyler said.

But do not let your desperation for better returns cause you to fall for a fraud, warns NASAA, whose membership consists of state securities administrators.

Tyler said the pitches will come from two types of predators: typical fraudsters, and unscrupulous registered and licensed financial professionals trying to boost their commissions or fees.

Take, for example, the Iraqi dinar scam. In this con, promoters promise double-digit returns to investors. The Better Business Bureau (BBB) has seen a substantial increase in complaints about the dinar scam from around the world, with many of them from military personnel and civilian contractors. The BBB said people complained that they paid for the currency but never received the money.

The Idaho Department of Finance, which shut down one promoter selling Iraqi dinars, warns that investments in foreign currencies - particularly when it involves unstable countries - are highly risky. How risky? Oh let's see:

- Volatile exchange rates.

- Thin or non-existent markets.

- Financial instability and opaque government monetary policy.

- The possibility that the currency you receive could be fake.

At a time like this, it is equally important for you to question recommendations from registered professionals. You should question advice to change your investment strategy based solely on current market conditions.

"An investment professional who has structured a portfolio based on a thorough assessment of an investor's financial profile is not going to suggest changes driven by short-term volatility," Ms. Tyler said. "A recommendation to make changes could just be a financial professional searching for commission income."

NASAA is particularly concerned about people who are nearing retirement or are already retired. In their quest to preserve their income, they could become easy victims.

"If a bad decision is made now, they may not have time to recover," Ms. Tyler said.

So how can you protect yourself? At the very least, follow these three simple tips:

- Ask for everything in writing.

- Hang up the telephone, delete the e-mail or ignore the advertising if the investment is pitched as being low risk with a high return. "It is an impossible relationship," Tyler said. In other words, a high-return, low-risk investment is a low-down dirty lie.

- Call your state securities regulator before you do anything. Just one quick telephone call can save you a lot of heartache. To find contact information for your state securities regulator, go to www.nasaa.org/QuickLinks/ContactYourRegulator.cfm

The Better Business Bureau suggests that before you invest, make sure your broker or financial advisers are licensed to sell securities. Always check to see if they or their firms have been disciplined by regulators.

This is very important, because if you do business with an unlicensed securities broker or a firm that later goes out of business, there may be no way for you to recover your money.

Look, before you panic, put what's happening in the markets in perspective.

Listen to Michelle Singletary discuss personal finance every Tuesday on NPR's "Day to Day." To hear her reports online go to www.npr.org Readers can write to her c/o The Washington Post, 1,150 15th St., N.W., Washington, D.C. 20081. Her e-mail address is singletarym@washpost.com Comments and questions are welcome, but due to the volume of mail, personal responses may not be possible. Please also note comments or questions may be used in a future column, with the writer's name, unless a specific request to do otherwise is indicated.