Skip to content

How Do You Detect Investment Fraud?

What Is Investment?

Investment, a word which make a lot of people think, this is how to have more money, and is the way to have more money and gain some income.

When Did Scammers Strike?

However, a lot of people have not been successful in their investment, especially during depressing environment, be it business, economic, health whatever.

Consequently a lot of people, in their desperation, try all sorts of investment methods, and ways just try to make money or recoup whatever is lost.

And this is the time, crooks and scammers thrive on human greed, and take full advantage of the vulnerability of human, as a result of which, this further make the investors lost more instead of recouping their losses.

According to Federal Trade Commission in its report stated that in 2020, they received more than 2.2 million reports about fraud, and about $3.3 billion was lost, you can read more about this in here.

Why People Fell To Scammers?

The problem is a lot of people think it will not happen to us, just like a lot of people think, they will not be infected with COVID-19 virus, even though they do not take the basic precaution, like wearing masks or wash hands often. If we have this assumption, and lay down our guard, or get greedy with some money making opportunity, we may regret our action later.

The crooks and scammers are much more sophisticated, with their intelligence, just wonder why don't they put their skills to good use, maybe they find it easier to scam, and con people, so they can make a lot of money.

So what are the usual or the latest tricks these scammers employed?

1. Too good to be true investment platform

A lot of times, some platforms claim they can generate return on investment way above the norm.

Some investors tend to believe this lucrative returns, and decide to invest, only to find out later it is just another Ponzi Scheme in operation.

Most of the time, investors do not bother to carry out some due diligence and find out more about the platform before investing.

2. You are approached to invest in certain investment plan.

When someone approach you and tell you, that he has a fantastic investment scheme, whereby, if you invest, you are able to make a lot of money, this is actually a red flag for you.

You should raise doubt about this too good to be true investment plan, sadly, a lot of people decide not to take more action to find out more about the scheme.

3. Use of the latest technology

Scammer usually have the following in their website:

  • Videos about their products or investment plan.
  • Testimonies in video presentation from supposedly successful investors who reap huge and handsome returns.

Upon seeing the videos, some people tend to believe the investment plan is genuine.

They will think this investment product can be trusted, unaware the crooks have created the videos just to impress people.

If one bother to check and do more research, they will find out similar videos have been shown in other investment plan too.

4, The Truth Secret of the Successful Investment Plan

If a marketer wants you to invest in the product he is promoting, and claimed that his method and technology is more advance and easier to make profit,.

What will you do?
  • Do you believe in him and jump in and give him money to invest for you?
  • Did you ask him what his secret is?
  • How is his method successful?
  • Whether he can show some proof to substantiate his claim?

If he refuses to show you some concrete evidence, that by using his method or technology, you can reap handsome profit in investment, you need to raise red flag, and be alarm of possible fraud and scam

5. The Most Vulnerable Group

Which is the most vulnerable group for investment fraud?

The group which is more prone to financial fraud, is the retiree group with huge sum of money, as they tend to make payment for one lump sum distribution.

We need to educate those retirees:

  • Not to hand over their money to someone,
  • Wary of some one who claim can help them to grow their money.

Fraudsters are good at evoking emotion, especially among the older retirees, to hand over their money in dubious decision-making.

6. Is there a thing called Secret Formula in investment?

if someone approach you to invest with him, claiming he has invented a secret formula in investment, and sure make money.

Before you jump into the opportunity, do the following:

  • Do ask him to show some hard evidence his secret formula has generated huge profit for him.
  • Ask him to show his trading records,
  • bank accounts statement showing he has made so much money
  • using his so called secret formula.

If he fails to do so, or is not willing to do so.

This is the sign  you should just walk away from him.

7. Awareness of possible fraud.

The moment we accept the fact that we all are at risk to fraud, be financial, or otherwise, then we can safely say, we are at least at a certain level of awareness.

Who are the vulnerable group?
  • People who believe they are not vulnerable to frauds, and
  • these are the people who most likely fall into the trap,
  • After all they are not going to take necessary steps to protect themselves,
  • they are not aware and alert of fraud.

8. When Do Fraud Happen?

Fraud cases happen now and then.

It is more severe and rampant during crisis or disasters.

For example, the current COVID-19 Pandemic which has affected people from all walks of life, with people losing jobs,  businesses badly affected and forced to close.

When do fraudsters strike?
  • When people in general are eager to generate income,
  • In order to ease the financial strain.

9. Have some knowledge especially financial knowledge to be aware of fraud

Nothing beat having the knowledge, and able to identify possible fraud.

As mentioned by one expert, she said “Prior knowledge about fraud, even generally, is particularly helpful in avoiding victimization,” .

You can learn more about what she said in HERE. 

If you want to learn more about detection of investment fraud, click HERE

If you have any comments and feedback, do give your opinion in the comments below.

Please follow and like us:

Leave a Reply

Your email address will not be published. Required fields are marked *