How to Avoid Investment Fraud – Blueprint

The number of opportunities presented by the internet to grow our wealth are enormous. However, the space is not as regulated and clean as one might think. Newbies need to be very careful while getting started because they generally are targeted by a bunch of scammers that act like a plague to the industry. It is true that the consumers are more educated than ever before.

Unfortunately, the scammers are also skilled and using history as a guide, they somehow manage to be one step ahead of the law enforcement agencies all the time. The main goal of this article is to enlighten you about the common tactics used by crooks in this sector and also to let you know the best ways of making the culprits pay for their actions.

Remember, one wrong move and few clicks on a computer can make or break your account in this field and you need to be totally aware of the reality of the situation at all times. Some of the things we have covered in the following section might appear like common traits, but know that usually narratives will be slightly modified and re-marketed by new fake platforms.

Undeniably, investing in things you fully know about is the best way to gain an edge and anything or anyone that claims to show you the easiest path to wealth will always have hidden agendas. Go through the entire list and you will realise all the trump cards present in the hat of these modern cyber criminals. Also, in the end we will show you the ways of recovering your funds from most kinds of online hustles. 

How to Avoid Investment Fraud

Obvious Signs

Investment Fraud is not something that has arised to the top in the recent days. However, from the early days of the online investment portals, this problem has turned to be a huge one and according to many estimates, billions of dollars are lost on an annual basis. Things like too good to be true claims are something that fooled a lot of people.

Now, things are more complicated and scammers have changed their strategies in order to make the most out of the situation. The current interest in a new set of asset class and trading instruments such as the cryptocurrencies has made their life much easier. As a general rule, always avoid dealing with new companies in the investments arena and never indulge too much with unregulated entities.

We understand that offshore brokers or other relevant firms might entice you with competitive pricing, but at the end of the day, they do compromise on the ethical factors and it will become a burden on your wallet. The landscape of the market is also changed a lot over the decades and the firms that are in the business of selling black boxes or automated systems also belong to the grey area of the law.

Below, we have listed few of the well known traits that we have witnessed over the years. Note that slight variations in their approach might occur from time to time, but if you notice the small print, the flaws will always be there. Being vigilant is the duty of every end consumer and as far as protection of the capital goes, never compromise on that factor for any reason.


Whenever a sales pitch is being presented to you by a fake trading platform or guru on the internet, desperation is always present. Sadly, the crooks always will be very good at understanding the psychology of their audience. The stores being shown to you might appear relatable, but most of the time, it will be almost impossible to verify. Also, regardless of the way the pitch is presented, the sales people will always be pushing you towards taking a decision on the spot and will offer a bonus stack to give you the ultimate boost.

Bonus stacks in most cases will just be a gimmick and the whole idea is to make the victims think they are getting a bang for a buck. Inflated value of trading courses or other automated systems is the perfect example to showcase this approach. Legitimate products sometimes offer discounts, but it usually will never be over 50% of the original price.

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    At any point of time, if you sense desperation and the counterparty is asking for your credit card details to get started with the free trial, then it might be a good idea to turn down their offer. Customer experience is always a top priority for all the legitimate solutions and they never force their products to the user base. On the other hand, the crooks never care about maintaining the image and they will go to extreme lengths just to convince people. 

    Licenses and Other Legal Certificates

    All the firms that operate in the financial sector are required to be regulated especially if they are involved with the control function. Though there might be certain exemptions, know that dealing with firms that are not regulated is calling for trouble and you should not get involved with them for any reason. Like we said before, the landscape of online investing has evolved a lot from its inception and now, things are comparatively easier to track and gathering information is a breeze.

    Before depositing into any investment portals always check for their licenses. The top firms always feature all of their certificates on the homepage itself and they will be transparent about the management side as well. For some reason, if you cannot locate the certificates or if the document appears to be fake, then check with the regulatory bodies. Most of the scams target the western hemisphere which means if you cannot find the details of the firm you are interested in on the database of institutions such as the FCA(UK) or the FTC(USA), then it is most likely a fraudulent venture.

    A lot of ponzi schemes do feature an incorporation certificate and in the eyes of the newbies that might be convincing enough. Nonetheless, the difference between being regulated and just featuring a registration certificate is poles apart. For your own safety always double check the details every time. 

    Know the Product Very Well

    Cyber criminals always jump from one niche to another. Their goal is to make the most out of the hottest and popular things in the marketplace. The types of products designed to make the lives of retail traders easier are countless and the wide array creates the perfect environment for con artists. If you are interested in buying any kind of software, tool or indicator, then always ask for a complete in-depth explanation.

    Being aware of the narratives is not enough, look for metrics such as the win rate, drawdowns and the maximum risk. Reputable vendors always have all the answers to the questions ready and some of them even offer free trials and demo accounts to test them out. Completely automated investment solutions do not cater to the needs of retail investors, but miraculously if you find one, be very skeptical about them.

    Remember, making money via trading or investing is hard and it definitely cannot be achieved by clicking a few buttons. In case if the platform you are dealing with refuses to answer all of your questions or if there isn’t any data to support their claims, then run away in the opposite direction. Do keep in mind that everything in this industry is all about numbers, though backtested results are not the ideal indicator of future results, it does provide certain key information. 

    Risk and Reward Ratios

    To make money via investing, an individual needs to have a very good idea about the long term trends. While buy and hold strategy works well for most indexes, things are not always that simple when it comes to individual stocks. More importantly, one needs to figure out the risk to reward ratios beforehand so that they can put a cap on the risk and have some kind of cushion in case the worst scenario occurs.

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    Tesla and other popular stocks like GME and AMC might have got your attention, but remember that gamma squeeze does not occur daily and those kinds of movements are rare. If your goal is to create a decent amount of passive income and let the profits compound itself, then consulting a licensed financial adviser is your best bet. Doing analysis for a lot of people might be simple, but the emotional mastery is a different aspect and it does take time to master it.

    Our advice is to go for Index funds or ETFs and play the long term game instead of day trading as it is more easy and a lot less stressful. From time to time, markets might see drastic changes and the current pandemic is the proof of that. So, do not invest more than what you can afford to lose and have a derivatives position as well to hedge the risk. Hedging might reduce the profit potential, but it also takes care of the risk and that is what ultimately matters in the market, right?

    High Returns Advertised or Guaranteed

    Retail investors always get excited whenever they see or come across stories of people that made millions with little capital. While there is nothing wrong in getting inspired by the results of other people, you should not give in to the temptations. Many investment portals nowadays are running ads using false claims and sometimes their lies are very obvious.

    Scam platforms showcase huge numbers only to spark your interest, but we can guarantee you that the only person to get rich from those schemes are the creators. If any firm is claiming to earn you double digit returns even on an yearly scale, then it might be time for you to reevaluate your decision.

    On the other hand, if any firm promises you certain returns like 0.1% to 1% on a daily basis, then report them to the authorities immediately. 1% might sound reasonable at first especially to newbies, but to achieve that consistently is almost impossible and not even Warren Buffet can do that. So, it is safe to assume that anyone that makes these types of bold claims are there for only one reason and that is to rip off unsuspecting investors.

    Making money on the side is possible via trading, but just do not get carried away by unverified claims and twisted narratives. Remember, if things were that easy, everyone would quit their jobs and there would never be any kind of financial problems in the world. 

    Ridiculous Narratives and Unverified Claims

    Almost all of the scam platforms have some kind of theories about the way they make money on their websites. If you carefully go over the narratives, they usually will be very vague and the details are not exactly clear. At the time of publishing this post, the most commonly used narratives are about the cryptocurrencies and the blockchain technology. As it is easy for anyone to create their own cryptocurrency, a lot of ICOs are popping up and they do not have any real value.

    Missing out on 100 times returns is a frustrating thing without doubt, but do not let pure declaration drive you. Investment platforms often flaunt about their abilities and boast about their features. However, if their website has no solid evidence like trading history or third party audits, then they are most likely bluffing about their performance.

    Skilled scammers might use technical words like AI and other fancy things trying to establish authority. Nonetheless, if the data does not support their theories, then it is time to say goodbye to them. 

    Pumps and Dumps

    This trick is as old as time in the books of the market. Low float stock and illiquid stocks are usually targeted by few people and they basically manipulate the prices by placing big orders. Though this technique is illegal, many people easily get away with it and at the end, the only ones to bleed will be the retail side. Pump and dump occurs when a group of people with high purchasing power target a stock, artificially inflate the value and then close their positions once the goal is achieved.

    Market, as we all know, is a zero sum game which means if one person is making money, there has to be someone on the other end that lost the funds. Nowadays, peddlers have moved to cryptocurrencies and there are many groups on social media platforms that encourage people to join them on this adventure.

    If you make the mistake of going with this type of crowd, then chances are you will get stuck with the positions and due to the illiquid nature of the underlying assets, it will be hard to square off the positions. Easy money is a dream in the market and you should never entertain any opportunities that claim to make you returns within a short period of time. 

    Avoid Penny Stocks

    Penny Stocks is a sector that is full of questionable practises and immoral peddlers. Companies that are classified as penny stocks usually have very shady backgrounds and the entire sector is vastly unregulated. Investors that typically buy penny stocks are also not that sharp when it comes to their reasoning skills and the gap in knowledge is very evident.

    Seeing some people make double or triple digit percentage returns might be attractive. However, understand that the chances of you achieving the same results is very minuscule and it is not worth the risk involved. There are dozens of Youtube channels that promote these low float and low market cap coins, the gurus might show profits, but things are not that easy.

    Regulators have taken severe action against people that were running boiler room operations pushing this type of instrument. Unfortunately, now the internet has made their work easier and it is indeed hard to eradicate them completely in the near future. If you are ever contacted by unknown call centers, then never ever make the mistake of giving them any of your banking information or contact details.

    Lastly, know that sales people in this niche are known to bluff and go to extreme lengths to get their commissions and they do not care about policies or your interest’s. 

    Sense of Urgency

    Making money through passive sources certainly sparks interests especially if the person being targeted is new to the world of investing. People have heard about ordinary people that earned a lot of wealth using the markets and for unknown reasons most newbies think it is a cakewalk. Scammers use this narrative and add up other classic tricks to create a sense of urgency so that they can make a fortune for themselves.

    By any chance, if the website you’re on has a countdown timer or a so-called limited time offer, then you need to rethink about joining them. Countdown timers are there just to induce urgency and most of the time just by refreshing the page, the entire thing restarts from the beginning.

    As far as limited offers goes, know that it is a gimmick used to give people that ultimate push to make a decision on the spot. Using emotional triggers is a nasty trick used by hustlers and it is remarkably effective. After all, certain aspects of human psychology never changes, right?

    No Background

    Investment arena is a sector wherein if a firm wants to be successful, then they have to maintain the highest level of transparency. We are not saying that they should share their secrets to the public all the time. However, they should be open about their administrative decisions and they should keep an open dialogue with their clients. Trust is an expensive asset by itself and it always brings enormous reputation to the companies that adore it.

    All the regulated firms have dedicated trading desks that are handled by professional money managers who have advanced degrees. The algorithms for the most part have taken over, but still manual input is required on a frequent basis. Any firm that does not disclose the details about their creators and key employees is always a cause for concern, because that is not the way it works.

    If the company you want to invest with is not sharing details about the fund managers and is not audited by a third party, then never dare to mess around with them. Remember, if the trust element is not present then, investing with them is like taking a shot in the dark, you will never be successful. Also, make sure that customer support of the firm you want to indulge with is truly professional. Many platforms are known to answer the clients only in the initial phase, but once they start asking for withdrawals or face any other type of issues, they will be left high and dry. 

    User Feedback Element

    This section can be commonly categorised as social proof. People love to share about their experiences and it is effortless to find any online product or service just by looking at their user feedback on forums or social media platforms. Some websites even incorporate few comments from the earlier clients on their homepage itself as it acts like a credibility enhancing factor.

    To know the real image of a company, it is best to look for data via niche related third party forums. Thanks to the present online era, the truth is impossible to hide for long and sooner or later, the reality will hit the public through various sources. New companies might not have much user feedback and in that case we strongly advise all our readers to wait for more data to emerge before pulling the trigger.

    If the firm you want to deal with does not have any customer reviews, then it is not a welcoming sign and unless you are totally sure about them, it is always better to avoid them at any cost. Using history as a guide, we can easily tell you that successful companies that genuinely helped people will always leave a ton of trial behind. 

    Online Brokerages

    Opening a trading account today is easier than ever before. Unlike a few decades before the entire process is automated and all you have to do is fill out a short form and submit KYC documents and you are good to go. Regulated brokers though they do not offer high leverage are the best option for the retail side. New wave of investors sadly prefer the unregulated exchanges and are using the same to trade both the forex pairs and the cryptocurrencies.

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    Unregulated brokers have too much control over the market feed and can literally push the price to levels that are favorable to them. As market makers, they need the users to lose money and it creates a loop that involves a significant amount of conflict of interest.

    Moreover, offshore brokers are known to use all the tricks in the books to lock the client’s fund via bonuses and other promotions. Trading by itself is hard and to succeed you need to use a brokerage that is both reliable and liquid. So, look for regulated options only and with the current number of choices available, the task won’t be daunting by any means.

    What to do if you get Scammed?

    We understand that regardless of how careful we are, online scams are something that can fool the best of us. This plague gets most of the population and there is no denying the fact that the scammers are indeed creative in their approach. Phishing attacks are increasing and even the business emails are getting breached. If you have lost money to any kind of scam, then do not let the crooks get away with it easily.

    First step you need to take is to block all the associated bank information(if applicable) and start collecting evidence of the transaction. It does not matter the kind of payment method you used as everything is traceable and that includes cryptocurrencies as well. Once the data is gathered, call your bank to get their input and in many cases a simple chargeback is all you need if you have made the payment through credit card.

    In case, the banks are unable to help you, go to your local authorities and write a formal complaint. Remember, they won’t act on individual cases if the amount is not big enough. Your best bet is to hire a recovery agency to do all the work on behalf of you. Alternatively, for quicker results get in touch with our expert team using the contact form below and we will offer you a free consultation. Once our team analyzes the data, they will show you the exact things that need to be done to get the money back. 

    Bottom Line

    Investment frauds are getting smarter and smarter every single day. Scammers are on the grind to find new narratives that will convince the newbies to put enormous money into the manipulated schemes. So, be careful, never get impulsive and more importantly, always cross verify and double check everything you see on the internet.

    Say no to get rich quick schemes and do not entertain any new ICOs in the crypto landscapes unless you have done proper research. At any stage if you have serious doubts about anything related to finance, hire a financial adviser and they will show you the best way of dealing with the situation. Remember, the key to riches is not some secret tool or strategy, it is knowledge and nothing else. 

    Investment Scams are everywhere on the internet, navigate the space carefully.

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