Investment and Trading Scams
Investment scams involve promises of big payouts, quick money or guaranteed returns. Always be suspicious of any investment opportunities that promise a high return with little or no risk – if it seems too good to be true, it probably is – and is highly likely to be a scam.
People lose more money to investment scams than any other. They can be hard to spot, so before investing always seek independent legal advice from a registered financial advisor.
Are you an older adult with savings? Do you own your home or other property? Then be on the lookout for scammers who want to take your money by tricking you. Older adults are targets of investment scams because they often have savings and other assets. The effects of investment scams can be long-lasting and devastating.
WHAT IS INVESTMENT FRAUD?
Investment fraud happens when people try to trick you into investing money. They might want you to invest money in stocks, bonds, notes, commodities, currency, or even real estate. A scammer may lie to you or give you fake information about a real investment. Or they may make up a fake investment opportunity.
Investment fraudsters might say they are telemarketers or financial advisors. They seem smart, friendly, and charming. They may tell you an investment opportunity is urgent. They try to earn your trust so you’ll give them money as quickly as possible and without asking many questions.
WHAT ARE SOME COMMON INVESTMENT SCAMS?
Affinity Fraud: Scammers try to trick members of a group that has formed based on a common characteristic such as age, ethnicity, or religion. Scammers act like they are part of the group to win the trust of the group leader and its members. The scammers hope that if the group leader invests, others will invest too.
High Yield Investment Programs: Scammers claim you’ll make high returns on your money if you invest with them. They say you’re guaranteed to make money off the investment. Often these investments aren’t real, or they’re really selling stocks that have almost no value.
Pyramid Schemes: Scammers will tell you that a small investment can earn a large pay out—or profit. But you have to find others to invest too. The “profit” that you get is really just money paid by other investors. The scheme falls apart when the scammer runs out of new investors or takes all the money and runs.
Ponzi Schemes: A scammer—usually a portfolio manager—says he will invest your money and earn you large pay outs. But the money you get is really just money paid by other investors. The scheme falls apart when the scammers can’t find any new investors to give them money.
Pump and Dump: Scammers buy cheap stocks and lie to potential purchasers about the quality of the stocks to raise their prices. You might think the stocks are a good investment, so you buy them at a higher price. Then the scammer then sells off the stock at the higher price, the stock price drops, and you’re left with worthless stocks.
Unsuitable Financial Products: A financial advisor may try to sell you something that earns them a lot of money but is not a good investment for you. Financial products like annuities can take a long time to earn the money you were promised. And if you want to withdraw your money, you might have to pay a large fee. More generally, some financial advisors may bill you for services you didn’t receive or products you didn’t ask for.
When you have been scammed and you have paid money to them with your credit or debit card, or with a direct bank deposit, you can actually get your money back if you know how regulations and financial laws are working and you build a strong recovery case. This is why we recommend 360 Forensic Ltd experts to help you build such a case.
Stock trading scams are unfortunately still a reality so you should be aware of it. And if you have already fallen for one of these frauds, don’t worry, we are here to help you.