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How To Avoid Being Trapped In An Investment Scam

With the rise in the economic crisis during the pandemic, fraudsters have found a new way of tricking people into investing their money. Once invested, it appears to be a gain to the investors unless they face a loss at the very end, which makes it very difficult to recover.

Let's discuss a few ways fraudsters use to take away people's money and leave them as victims of investment fraud cases.

Ponzi Scheme

Using this scheme, trickers offer a 50% return in 45 days to the new investors. Once the investor pays the amount, their money is used to return the amount to the existing investors. It helps the fraudsters to gain more trust and money from the early investors.

Sure signs of a Ponzi scheme would be:
    • Guaranteed high return on investments with minimal or no risks
    • Unlicensed and unverified companies
    • Highly consistent returns on investments

The next time you talk to an investor who talks or provides the points mentioned above, leaving the deal would be the best investment!

Bogus Certificates Of Deposit

When investors look for fixed-rate returns such as CD, they invest on spoof sites. These sites appear to be legitimate with all the authorized names, URLs, and URL addresses but are just the counterfeit of the recognized organizations.

Sure signs of a false CD would be:
    • Providing a high rate of interest without any early withdrawal penalties
    • Asking the investors to send their money to unknown or foreign accounts
    • Offering only CD and no other financial products

It would be great to cross-check many times before investing in the website chosen while searching online.

Pandemic Stock Promotions

Many companies claim on social media platforms that they offer services or products that could cure COVID-19. It makes them gain the people's attention, who then decide to invest in them, considering a valuable stock. But unfortunately, this was a trick to make investors fall for their stocks, and the fraudsters don't let their investors sell their company stocks.

Sure signs of this unsolicited promotion scam would be:
    • Contacting the investors via social media, spam emails, and unasked phone calls
    • Talking about the boom of the company's products and services
    • Continuous increase in the company's stock

Stock promotion scams make the investors lose a lot of money as they only allow investments but no selling of the bought stocks.

Affinity Frauds

The fraudsters try to scam the people based on their common groups or community. They try to gain the members' interest by claiming to be a reliable source and then offering them their fake schemes. They trick the users by using bonding or trust as a medium.

Sure signs of these community frauds would be:
    • Using trust and friendship as the tools to manipulate the investors
    • Offer instant return on investments
    • Unlicensed and unverified companies

Sometimes, they may even involve well-known people in their investment plans to make them look more reliable and legitimate. But, in the end, they end up tricking everyone.

The best way to keep oneself away from such frauds would be to stay updated on all these scams and cons. It would not be easy to do it manually, but attending a knowledge-intensive financial and insurance conference like Money 2.0 Conference would help!

06/08/2022 - 06:57
Author Image
Author Name
Vinayak Joshi
Author Bio

Vinayak Joshi is an integral part of the Money 2.0 Conference team who is curious about the world of finance. With a keen interest in cybersecurity, internet financial fraud detection, scam investigation, and digital forensics, his passion lies in helping people traverse the internet securely. A self-declared anti-spam and phishing expert, when Vinayak is not working, he loves to read crime fiction, write, and play basketball.