The most common investment scams and how to spot them

Vijay Valecha, The National, October 17, 2024

Investment scams and financial fraud have been increasing globally at an alarming rate. They are perpetrated in various forms and often end up with unsuspecting victims being robbed of their lifelong savings.

Most scams promise investment returns that sound too good to be true, guaranteed profits, ways to beat the stock market and little to no risk. They tend to exploit the desire for quick returns and are often sold through word of mouth and cold calling.

Financial experts always advise individuals that good investments tend to be boring and only benefit from the power of compounding over the long term.

“It’s extremely important to undertake thorough research before trusting anyone who offers any sort of investment opportunity. If they are offering a high return for little risk, it's probably too good to be true,” says Alison Soltani, founder of Leap Savvy Savers.

“I would run it by the Simply FI Facebook group (highly trusted source) and get their feedback first. It’s always best to stick to tried and tested long-term investment strategies – investing should be boring and your returns compound over time.”

Rupert Connor, partner at Abacus Financial Consultants, agrees and urges investors to conduct thorough due diligence, verify the legitimacy of investment opportunities and be wary of promises of high returns with low risk.

Investment scams claim you will make a lot of money quickly with little to no risk – usually by investing in the financial markets, cryptocurrency, real estate or precious metals and coins.

These fraudsters get your attention with social media posts or online ads that often encourage you to attend free events or watch introductory videos to learn the secret to getting rich.

They back up money-making guarantees with success stories of people enjoying lavish lifestyles.

The unprecedented rise in investment fraud is due to a combination of traditional and modern tactics, according to the 2023 State of Investment Fraud report published by Carlson Law, which analysed data from the FBI and Federal Trade Commission.

Fraudsters are also exploiting advances in technology. Many of these news scams use artificial intelligence, such as voice cloning and deep fake videos.

“Investment scams in Dubai have surged in recent years, with fraudsters increasingly targeting investors by promoting seemingly lucrative opportunities in sectors like real estate, energy and cryptocurrencies. These scams often exploit trust, leading individuals to invest significant sums without proper due diligence,” says Vijay Valecha, chief investment officer of Dubai-based Century Financial.
 

Source

The National