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What You Need to Know about Investment Scams

Always exercise caution with anyone who offers you quick money. Con artists are very good at making you believe that the investment is legitimate, that the rewards will be high, and that the dangers will be little. There is always a catch to something.

Investment Scams
Investment Scams

How Are Investment Scams Carried Out?

Investing cons typically fall under one of these three categories:

  • This investment opportunity is a full and total hoax.

  • The investment does take place, but the money you donate to the con artist does not contribute to the investment in any way.

  • The con artist will falsely claim that they work for a reputable company, but this is not the case.

In any event, the money that you purport to "invest" is actually transferred directly into the bank account of the con artist, and not into any actual investment. If your money is taken by a con artist operating from another country, it will be incredibly challenging to get it back.

Anyone can fall victim to a con, and each con is unique in its own way. Scams are notoriously difficult to detect, and they can appear and even feel genuine in the heat of the moment. Scammers are able to spoof real businesses by using websites and apps that have a professional appearance.

The Most Common Types of Investment Scams

Investment Frauds Related to COVID-19

Relevant official authorities are now issuing a warning to investors about businesses that claim to offer goods or services that may prevent, detect, or cure an infection caused by the coronavirus (COVID-19).

Criminals that commit fraud use current affairs and breaking news as bait to persuade potential investors to part with their money by promising high returns on their investments. At this juncture, it is of the utmost importance to maintain vigilance and be familiar with how to recognise, dismiss, and report fraudulent investment activity.

By use of Investor Alerts, official bodies are bringing to the attention of the general public fraudulent behaviour relating to COVID-19. You can also find materials for fraud awareness by visiting The Global Payback, a reliable asset recovery company, where you can also remain up to date on the latest investment scams relating to COVID-19.

Investment Fraud via Social Media

The proliferation of social media has provided us with a wealth of options to engage with people and facilitates the easy dissemination of content throughout the globe. Con artists market bogus investment possibilities using the same social rewards that they use themselves.

They have access to personal information, allowing them to target potential investors and even create the idea of having a shared common interest through the use of social media.

How does fraudulent investment activity take place using social media?

Fraudsters may reach a large number of individuals at a minimal cost by using social media. They can create phoney accounts and email addresses, and they can link their posts to a website, videos, or photographs that make the investment look authentic.

It may be difficult to identify or locate con artists who are utilising social media as a platform to promote a scam because of the potential for anonymity that exists on these platforms.

If a scam becomes popular on social media, individuals who believe the investment to be legitimate may encourage others in their network to participate in the plan by making financial investments.

This can lead to a form of fraud known as "affinity fraud," in which a group of people with a shared connection, such as friends, family members, or colleagues, invest in and then promote a questionable or fraudulent venture. If the investment is a scam or does not succeed, not only will money be wasted but also personal relationships will be damaged.

Gold Scam

The advantages of owning a precious metal such as gold include its tangibility and sense of security, in addition to the fact that its value frequently rises during times of market instability.

Especially during times of economic unpredictability, this fact makes gold a desirable asset for investors to own. Criminals that commit fraud capitalise on situations like these and employ strategies to persuade those who aren't paying attention to spend their money in dubious financial goods.

How Does One Pull Off a Gold Scam?

Sometimes, con artists may try to pull investors in by claiming that they need funding to reopen a mine that has been closed down. This is a fairly straightforward method.

The fraudster will guarantee the investor a high return on their investment in addition to a share of the proceeds from the mine in exchange for the investor's financial support in the form of funds to acquire equipment. At other times, the investment opportunity that is being pitched may involve an aggressive stock promotion or a "pump and dump" plan that is centred on a public firm that is involved in the production or mining of gold.

Con artists might also offer to sell you gold bullion and then store it for you in a "safe" vault with the promise that they will sell it to you at a higher price as the price of gold rises. This would be an example of a gold scam. In most cases, there is no actual gold bullion to be found.

How to Identify a Fraudulent Investment Opportunity

Make sure you are familiar with the red flags that may suggest an investment opportunity is a fraud, including the following:

  • Approaches that are not solicited and can take the form of a phone call, text message, email, or even a person physically knocking on your door.

  • When a company won't let you phone them back after you've already done so.

  • Situations in which you are compelled to make a snap decision or are put under intense pressure to do so

  • The only kind of contact information that is provided to you, or that can be discovered on their website, is a cell phone number or a PO box address.

  • You will receive a high rate of return on your investment, but you will only be exposed to a moderate amount of risk.

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