Top 10 Ways to Expose Investment Frauds

Investment schemes may have increased in profitability, but so have deceptive methods.

Unfortunately, that means we have to contend with a plethora of investment frauds.

You may have heard of some of these sweet-talking schemes too. With just a little input, you’re guaranteed plenty of profits. Or at least that’s how the story goes.

The end result in actuality? You wind up losing everything in your possession.

Fun for the scammer, not quite as fun for you.

As such, it’s imperative that we learn how to tell frauds apart from the real thing.

After all, it’s your own money; you have to take responsibility for it.

Top 10 Ways to Expose Investment Frauds

1. Prior Research

Knowledge is power. And research will get you there.

Many investment frauds occur because of a lack of contextual knowledge or know-how, which leads to the victim placing trust in a blind manner.

Before you commit, make sure to do your due research. Look into a company’s business. Search up financial statements. Investigate the authenticity of their thesis if they claim to have a PhD.

Verify whether they’re genuine, and you’ll be halfway through the battle.

2. Ask Questions

It’s well-known that questions garner information. And to curb investment frauds, you’re gonna need all the information you can get.

Pose all the necessary questions upfront. Why would the other person specifically pick you to invest with? How would you add value to his/her proposal? What are the fees? How does the investment company earn revenue? If they’re genuine, an insightful explanation would only be warranted.

3. Be Wary Of Endorsements

You may have heard of all the celebrity-related scams around town. A local star is supposedly endorsing an investment website and has professed to earn thousands off it.

With both star and financial power, it’s no wonder such scams have proved to be irresistible… and dangerous.

One way to decipher an endorsement’s authenticity is to scour the implicated star’s own social media accounts. If they really happen to endorse the website, chances are; their account will contain a trace or two of it.

The same goes for those who claim to be endorsed by government leaders too. Though in hindsight, you should already be aware that trustworthy leaders do not usually become affiliated with private businesses.

4. Don’t Just Believe In What You See

Oftentimes, we’re led to believe in what we see. For instance, someone could throw out a ludicrous-sounding proposal and proceed to ‘authenticate’ it in front of you.

Led by the sudden twist in events, you find yourself beginning to believe.

Except that you shouldn’t. Just yet.

See, the idea’s just like magic. A magician does a series of complex tricks in front of you and you begin to believe that he’s the real deal. Yet, if you just do enough research, you will realise that he has simply practiced to such a degree that the tricks come off as genuine.

When they’re not.

As such, don’t just believe in what you see. Make an effort to analyse the proposal yourself. Verify whether it’s the real deal, or just ‘magic’.

5. Beware Of Reciprocity

It’s an age-old trick in the book.

Potential fraudsters will rely on the act of reciprocity and the goodness of your heart to lure you into a deal. They may invite you to a free investment seminar. Perhaps treat you to a good meal. Make you feel attached and indebted to them in some way or another.

But do not let your own kindness take charge.

No matter what they say, always do your due research before committing. Sure, they may have done you a favour, but if you think about it in the long run;

The product you’re investing in is likely to cost a lot more than the favour they just did for you.

So make sure it’s the right thing before you put pen to paper.

6. “Halo” Effect

Also, make sure that you’re investing in the product and not the person.

For ages, successful negotiators have a high tendency to be extremely likeable. It’s not a coincidence.

So put aside your affection for the individual. The product comes first.

7. Google

“Google is your best friend,” they said.

Well, they’re not wrong.

Most individuals possess some form of social presence these days, whether it’s for publicity or networking purposes.

Verify whether their claims fit with their lifestyle, and whether they’re scandalous in any way.

Reviews would be a great indicator, but do beware of fake reviews.

8. “Guaranteed High Returns”

No matter what anyone says, there is no fail-proof investment that grants high returns.

Do not get me wrong; there are safe investment schemes that guarantee returns. But more often than not, they warrant low returns.

High returns, on the other hand, often require high risks, to the point where you may lose your assets altogether.

So if someone continuously tells you that their investment plan “guarantees” high returns at no real cost, you’ll know something’s up.

9. Ignore Pressurising Tactics

Negotiation tactics such as “once in a lifetime” sales pitches or “take it or leave it” approaches are often geared towards gaining the upper hand in a transaction.

An investment proposal, however, should not have to rely on such tactics to succeed.

So ignore the pressure and stick with the investigations. In a world as fraudulent as this, it’s more worthwhile to study first and commit later.

After all, you lose nothing if you miss out on a deal. On the other hand, you could lose everything if you rush into a deal.

10. Sixth Sense

As cliche as it sounds, you can arguably rely on your sixth sense.

If a deal sounds too good to be true and your gut is niggling at you, opt to walk away.

If a deal promises high returns but offers scarce details, opt to walk away.

It may be tempting to prioritise a chance of striking it big over realistic comprehension, but do take note that such gambles often come at ludicrous costs.

The last thing you want is to ignore what your sixth sense is telling you and fall victim to an investment fraud.

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