Investment scams and fraud are everywhere these days whether online or offline. Many people including investors are targets by many of these fraudulent tactics. You need to be careful whom you are dealing with especially when it comes to your hard-earned money because the economic crisis could also bring bogus schemes from people without conscience. 

Moderately Challenging


1. Learn to detect the different strategies that fraudsters use with their scams like leading you to believe that other known and successful investors have already invested in their business because of their proven and successful method. Some of these fraudsters will even offer you half of their commission if you buy something from them. 

Other tactics that were created by con artists is when they have a made up plan and insist that you sign up immediately since they only have a limited supply of what you're looking for. The most common strategy that scammers are using is when they lure you to join something in the prospect of huge profit and wealth.

These scammers will entice you to buy what they are currently offering and they even give you a guarantee that it can produce a lot of money as your passive income in just a very short period of time and you don't have to work for it in a hard way. Other fraudsters will offer false promises that if you can buy a particular thing, all you have to do is nothing and only wait for your cash to come in and grow. 

Some cheaters will try to build credibility by declaring to be with a renowned business or associated with very known successful individuals. Some scammers will also allow you to see their fake credentials or talk about how good their experiences were when it comes to the kind of business that you are looking for.

2. Look for the different kinds of investment scams online or offline. Investment fraud or scams could come to you in various ways. There are fraud securities that you need to know if you are an investor. 

If someone will tell you that you can still change or cancel a previous investment mistake that you had purchased then be cautious of this. Other scams usually starts with an enticing offer from a website or company that may pay you a higher price for the profitless shares of stocks in your investment portfolio but in order to receive the agreement, you need to send a certain fee in advance as a payment for the special service. 

If you'll give money for the said service, then you shall no longer see that payment fee from the agreement that you had entered into. Other scams come from other countries and victimized local investors. They are offshore scams because they are operated by foreign fraudsters. 

They would maneuver the scam in another country since it could be difficult for local law enforcement agencies to check fraud that comes from overseas. It will also take some time to correct a situation or make something right after the investors were already scammed from foreign fraudsters. 

Another kind of scam is known as the pyramid scheme. The fraudsters will tell investors that they can turn their small investment into big profits within a short period of time although the only people who take part in the activity in making the false profits could only be the first or second group of participants. 

The fraudsters will just keep on recruiting new participants into the program. It may look like a legitimate business from the start until it will fall apart when it becomes unworkable to recruit new participants.

3. Be aware of the popular scams like the Ponzi scheme. This may look like pyramid scheme although it requires a stable or fixed stream of incoming cash in order to work. Usually, the investors in a Ponzi scheme typically don't have the need to recruit new investors in order to earn their share of profits. 

This kind of scam may only collapse if the fraudster can't recruit new investors or when there are too many investors who will get their money out from the said program. The collapse of this type of scam may usually happen during terrible economic crisis. The main fraudster in this type of scheme will only collect the money from new investors and uses it to pay the alleged returns to those early stage financiers instead of investing the money in order to grow as what was originally promised to the investors.

Another kind of scam is when a fraudster intentionally buys shares of stocks at a very low price coming from a small and lightly traded company. The fraudster will then spread wrong or made up facts so that many will bid for the interest in the stocks and therefore increase its stock price. 

The investors will now make a buying demand at a higher price to a greater extent since they believe that they are really getting a good deal on a rising and favorable shares of stocks. When this happens, the fraudster will just suddenly dumps his shares of stocks at the high price then disappears. He or she will leave many investors hooked with a number of worthless shares of stocks. 

This kind of scam is a traditional one that was usually made out by fraudsters who will just do it through distributing online newsletters or fax. They had also done this before by just calling investors through their phones. Some fraudsters nowadays will just send it via spam emails or on anyone's phone through text messages.

4. Check for warning signs of the different kinds of investment fraud. You need to protect your own investment and avoid being drawn into any scam online or offline. Always monitor your account statements to make sure that your investment's account activity is agreeing or compatible with your given instructions.

You must also know the person who holds most of your assets. You can detect account discrepancies if there will be unauthorized trades that had occurred without you knowing it.

Another thing to note is when you'll have a missing fund. If you have an adviser in your investment who is also the custodian of your assets and the keeper of your accounts then you must be 100% sure that he or she can be trusted since this person might be tempted to commit fraud that's why some investors will assign an independent third-party as the custodian of their investment.

Tips & Warnings:

  • Check the background of an investment professional or broker before working with them. Thoroughly examine if the person had a criminal background especially their licensing or registration.

  • Be sensitive and observant when talking to anyone who claims that he or she knows a lot about successful investing in our present economy so that you'll be able to spot any persuasion tactics used by a fraudster. An investment fraudster makes his or her living by making sure the deals he or she advertises, brags about and shows off will appear both good, true and profitable.