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6 Typical Investment Scams To Watch Out For

An opportunity that invites you to put your money in a questionable investment is a potential investment scam

An opportunity that invites you to put your money in a questionable investment is a potential investment scam. Usually, the investment does not exist and you end up losing all your money. 

The offer usually seems lucrative (pretty much like Spectrum Specials), which attracts you to invest your money without thinking straight. The result – you end up losing the money and the promoters are hard to catch.

Stay safe by watching out for these common investment scams that can cause a big loss for you.

1: Advance Fee 

In this type of scam, the victim is persuaded to pay the amount upfront for taking advantage of a promising return. The scammer disappears after they receive the money.

Often, the advance fee scammers target investors who have already lost money in a risky investment. They offer the investor a chance to recover their lost wealth. But in exchange for a substantial profit, the investor must pay a refundable deposit which isn’t really refundable. 

2: Social Media Scam 

Social media frauds are everywhere. Con artists have been using social channels for promoting fraudulent investment schemes for a long time. They create an illusion of common interest to develop an emotional connection with the victim. 

The fraudster creates a fake social media account, email address, and a link to a scam website. The photos and videos shared to make the investment appear legitimate. You will have difficulty identifying these fraudsters on social media, which is a sign you must stay away.

The investment scheme usually encourages you to invite your family and friends to invest too. To stay away from this type of scam, watch out for signs that include: unsolicited investment offer, unbiased recommendation, and a guarantee of high return with zero risks.

3: Forex Scam

Forex trading is dominated by international banks with cutting-edge technology, highly trained staff, and large trading accounts. The scam forex ads promote foreign exchange trading as something highly accessible via software and courses. The promoters don’t tell how risky forex trading can be.

Most forex trading schemes are sham. Their forex trading services operate from another country by an unregulated firm. They may not invest your money as claimed. The forex trading firms ask the victim to wire money into the offshore account before trading, which cannot be recovered. 

4: Crypto Fraud 

Cryptocurrency has received a lot of recognition over the years. Investors have made millions mining bitcoin. New cryptocurrencies have popped up as well and investors are now ready to jump on the bandwagon. 

Crypto is unregulated right now and people have started to take advantage of this by launching schemes to invest in cryptocurrency. This thing happens to newbies in most cases.

Before you decide to invest, it’s important to have a deep understanding of the currency you are planning to buy. It’s never wise to invest in something you don’t understand. Scammers are everywhere, don’t sign up for mysterious investments.

5: Pension Scam

It’s one of these investment scams that seniors fall for every time! The scammers target people with retirement savings in a LIRA. You cannot withdraw funds from this account until you reach 55 years of age or older. Also, there are limits to how much you can withdraw annually. In some cases, you have to pay tax on the withdrawal. 

A common pension scam is the RRSP loan. To get this loan, you are required to sell your investments and use them to buy shares of a startup, which the promoter is selling. They promise to give you 60 to 70 per cent of the money invested. You are also promised cash payments with no tax. But in reality, you might face some technical difficulties which will not allow you to stable yourself and in the end, you will be disappointed

In most cases, the investment bought is worthless. You may never see your funds again, which can be a huge loss!

6: Pyramid Scam

In this type of scam, the promoter recruits people via ads and emails, invites them to work from home, and promises to convert $10 into $20,000 in a matter of months. 

You are asked to join a group of investors who have become rich from this great investment. This makes it seem legitimate. The promoters send the first check to win your trust. If you invest more and invite your friends and family to join as well, at a certain point, the promoters disappear by taking all the money.

Final Words

People with little to no knowledge of this investment fall for these scams easily. You will lose your money if you agree to invest. 

In case you become a victim of investment fraud, the law offers protection. You must contact an attorney immediately to help you investigate the situation, design an action plan and recover your funds.

Johnny Lee

Written by Johnny Lee

Internet Entrepreneur | Digital Marketing Expert | Marketing Consultant | Stock Market Enthusiast|| Founder & CEO at Mag Media, based in California.

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