Your savings are the result of your blood, sweat, and tears, and surely you want to invest them in something worthwhile. However, scammers are finding new ways every day to get hold of your hard-earned money, and that is why it is vital that you educate yourself on the various kinds of investment scams out there so that you can steer clear of them.
Pyramid and Ponzi Schemes
Taking the hierarchical structure of a pyramid, these scams inadvertently turn the investors into promoters of the fraud scheme as well. Those who decide to participate in pyramid schemes have to recruit new participants/investors who have to do the same work.
The pyramid keeps on growing until new investors stop joining, thus collapsing the scam. Although Ponzi schemes are portrayed as legit and promise investors high returns, everyone who joins eventually loses their investment.
FX Scams
Forex, or foreign exchange, refers to the trading of foreign currency. This process is extremely intricate, and even after years of training, experts can’t get a hold of it. Scammers like to take advantage of this complexity and try to lure in naïve investors by showing them dreams of large sums of money without any risk involved. These con dealers or brokers are usually not registered, and thus it is difficult to track them and recover the invested money.
Affinity Fraud
They say keep your friends close, but your enemies closer. This applies very closely to those involved in this investment scam. The scammers take advantage of close social groups or organizations such as religious communities, professional organizations, or ethnic communities by pretending to be “one of them” and encourage the people who are part of these groups to spread the word about investing in some project that does not give anything back later on.
The Binary Option Scam
Simple to carry out but hard to detect, this investment fraud revolves around betting on whether a stock or currency will rise on the charts or go down. These are promoted via clickbaits on websites, through emails, or on social media by portraying profits in the accounts of fake investors. Since many of the platforms used for trading are established in foreign territories, it is somewhat impossible to retrieve the investments.
The Next Big Thing
Con artists never give up. To take hold of investors’ hard-earned money, they develop fake opportunities or products and claim that it is the “next big thing.” This urges victims to invest promptly so that they won’t miss out on the new hype. These systems are not regulated by any authorities and end up being a fraud majority of the time.
Boiler Room Fraud
Targeting innocent people who have already been victims of recent fraud, boiler room scams are exceptionally cruel. The former phisher usually sells the victim’s contact information to another fraud scheme or criminal organization, which gives the victims the opportunity to regain all the money, at the cost of some service fee or “tax money.” The investor becomes the victim of another fraud, and the vicious cycle continues.
In the Limelight: Fake Celebrity Endorsement
Commonly used to advertise fraudulent schemes based around cryptocurrency, swindlers use names, images, and personal details of well-known personalities to entice innocent people to invest in these schemes. These are promoted via ads on social media platforms or fabricated news media.
The Pump and Dump
Con artists approach potential investors and “pump,” or pressurize them to invest in hot deals on the stock market. With an increasing number of investors, the stock’s value rises at an exceptional rate. When the stock share reaches its peak, the conman sells it, leaving the investor with an empty wallet.
Ending Note
These were some common types of frauds. In times like these, where fraudulent schemes are more prevalent than ever, it is important for you to stay vigilant at all times. Make sure that you are not pressured by anyone into investing. Do not be fooled by appearances or big promises; conduct your own thorough research first, check whether the seller is registered or not, and consult a professional or even a lawyer before you dive into something new. Your money is your property, and no one has the right to take it away from you.