Beware of investment fraud: How to protect your money!

Beware of investment fraud: How to protect your money!

More and more people are falling victim to current online scams. A report by ORF Kärnten shows that a variety of forms of fraud are flourishing, especially in the area of ​​online investments and financial trading. Methods are becoming increasingly sophisticated, making it more difficult for potential investors to correctly assess risks.

One of the most common forms of fraud is the so-called boiler room fraud. Fraudsters pose as stock brokers over the phone and advertise a company's shares, promising high short-term profits. With professionally designed websites and the pressure of not wanting to miss out on an exclusive offer, they try to convince their victims to invest. Often the first investment seems profitable, while subsequent deposits usually result in losses and it is not possible to recover the money. The services offered often turn out to be worthless, as do the FSMA describes.

Variants of fraud

Another common scam is the recovery room scam. The fraudsters contact investors who have previously been victims of fraud. They offer to help recover lost funds, but charge upfront fees with no results.

Additionally, binary options are a common scam. This highly speculative form of investment is prohibited for non-professionals in Belgium. With these investments, the buyer speculates on price movements, whereby the “all or nothing” principle applies: a correct prediction results in profits, while an incorrect prediction results in the entire stake being lost. Many platforms offering binary options have been proven to be fraudulent.

Professionally designed trading platforms are also a significant area for fraudsters. These often offer a variety of financial products and advertise aggressively, often using fake identities of well-known personalities. Investors are pressured to invest larger amounts, although recovering the money is usually impossible.

Tricks of scammers

Another example are so-called cloned companies, where fraudsters take on the identities of recognized people or companies. They appear to have the necessary authorizations for financial services while offering fictitious or worthless services.

Pyramid and Ponzi schemes are also common fraud schemes. A pyramid scam works by using new investors' money to pay returns to previous participants. In the Ponzi scheme, the organizers themselves look for new investors, while the remuneration depends on the term and amount of the investments. Both systems rely on the constant inflow of new money and do not offer any real investment opportunities.

Investment fraud has many faces. Scammers often sell goods as valuable investments, often without the necessary permits. Promises of high profits, often advertised via social media, arouse mistrust. For example, “investment diamonds” are an example of such misleading offers.

In order to avoid this scam, it is advisable to remain suspicious of exaggerated promises of profits and to find out about the identity of the providers. Consumers should always be careful and, if in doubt, contact official authorities to report possible fraud attempts.