Learn how to identify investment fraud and how to avoid falling victim to one. Scammers employ sophisticated methods to induce victims to part with their money. There are warning signs you can look out for to avoid investment schemes.
High yields with little or no risk
Be wary of investment opportunities that claim to protect or guarantee your capital while promising high returns. The greater the expected return on an investment, the greater the associated risk. Numerous investment frauds use lucrative assurances to entice victims.
Pressure techniques
- “Limited availability! Invest now before it’s gone!”
- “Special pricing for the first fifty investors. Don’t pass up this incredible opportunity!”
- “More than 2,000 people have invested — what are you waiting for?”
- “Invest today and receive an additional 10% credit plus numerous other benefits.”
Limited offers, time-sensitive gifts, and rebates are common tactics used in investment schemes to induce victims to invest their money immediately.
Instead of focusing on the carrots dangled, make sure you thoroughly comprehend what you are purchasing.
Provision of commissions
Generally, legitimate investment schemes do not offer referral commissions to investors. Such incentives are utilized by investment frauds to encourage existing customers to rapidly expand their investor base by recruiting their friends and colleagues.
Invented track recordings
For the purpose of gaining credibility, investment frauds may claim to have many years of experience, multiple accolades, or significant investment profits. Some utilize testimonials from “satisfied customers” to enhance their credibility.
You should view claims with a healthy degree of skepticism. Whenever possible, verify the claims with a third-party auditor.
Verify if the entity is registered.
Some investment schemes might make the claim that they are subject to appropriate regulatory oversight in order to further mislead you.
Confirm such assertions by examining the resources on the website of the Monetary Authority of Singapore (MAS).
- Financial Institutions Directory – a compendium of MAS-regulated financial institutions and the regulated activities they are permitted to offer.
- Register of Representatives – an inventory of individuals who engage in MAS-regulated activities
- Investor Alert inventory – a non-exhaustive inventory of unregulated by MAS individuals who may have been mistakenly perceived as licensed or authorized by MAS.
- Remember that interacting with an unregulated entity entails forgoing the protections provided by MAS-administered laws.
Investigate the company’s history
Do not believe everything you hear immediately. Verify the information provided by the entity about themselves or the investment opportunity, such as representative backgrounds and the entity’s track record.
Furthermore, it is essential to ask the entity as many questions as necessary to completely comprehend the investment opportunity. Be suspicious if it cannot or avoids answering any of your queries.
Please inform your bank and file a police report immediately if you suspect that you are a victim of fraud. Inform your family and colleagues about investment scams so they do not become victims. Keep in mind that if an investment sounds too wonderful to be true, it likely is.