Investment Fraud – Learn to Identify Them

Since the early 2000’s, the online world has evolved and without a shadow of doubt, it has become a necessity of all our lives. From banking to shopping, everything is carried out via the internet, but due to rapid growing changes in the sector as a whole, it still has a lot of flaws.

In this post, we are going to go over the ways to identify Investment Fraud, recover funds from them and the common marketing tactics they use. Once you have read this article, we strongly feel that you will have a much better understanding about the way platforms are structured online and your chances of getting hustled will be slim to none.

Remember, the landscape is also evolving and sometimes the things you come across may be impossible to distinguish at first. However, when it comes to specific details, the crooks will always make a mistake and to catch that, you should have well trained eyes. 

What is Investment Fraud and How to identify them?

Any firm or platform which promises you high or unbelievable returns with little to no efforts required from your side and flees away with your money is collectively labelled as Investment Fraud. Earlier, the investment platforms for the most part featured obvious telltale signs such as exaggerated claims, no details about the owners or employees, etc,.

Now, the crooks have improved their approach and the scams now are much harder to catch. As a rule of thumb, do not interact with any company which boasts about their accomplishments, but doesn’t showcase any hard core evidence to back up their claims.

Furthermore, if the firm you are dealing with doesn’t uphold transparency and have all the necessary legal certificates, then walk away from their offers immediately or else sooner or later, they will burn a hole in your pocket. Always keep in mind that there is no such thing as an easy road to the riches. If you find anything which claims the opposite, then turn to the opposite direction and run.

Types of Investment Fraud

There are a ton of modified form of investment frauds floating on the internet. Anyone who has reasonable experience in the financial sector can easily see through the lies.

However, the newbies won’t be able to assess the situation correctly and they are the ones who will be the most vulnerable ones. We gathered all the data and found out that there are certain ways and means employed by every scam which are explained in detail below.

Ponzi Scheme – All the unregulated investment opportunities and high yield investment programs follow this model. The telltale signs of this kind of scams are grand plans, high ROI and no legal documents. Basically, if you come across any firm that promises over 20% annually with no strings attached and no clear business model, then chances are you are dealing with a ponzi scheme.

To generate cash flow, they use the money brought in by the new investor to pay the old participants while keeping themselves a small percentage. As you can tell by now, this model is unsustainable and once the marketing efforts dry up, then they will bite the dust very quickly. 

MLM Scheme – This model is also similar to the one mentioned above, but it usually will be presented to the public in the name of affiliate marketing. In simple words, the participants or users will get paid to recruit more people under them and they all get fixed revenue share.

In the MLM scheme, the cash flow is mainly brought in by new participants and they will also burn down if they can’t find a new stream of customers to replace the accounts which are closing down. Some MLM schemes might feature a product line or other fancy narrative to earn the trust of the public. Nonetheless, if they are not licensed, then they will get shut down sooner or later.

Get rich Quick Scheme – The trends online change swiftly and we as humans are getting used to instant gratification more than ever. As a result, many crooks are now using this fundamental tendency to loot the naive people who don’t understand the world of finance.

If you are active on social media platforms, then we are pretty sure that you must have come across various doubler programs which promise to 2x your capital in a ridiculously short period of time. The worst aspect about this kind of programs is that, in the beginning they do pay some clients to build the trust.

Once they have made enough money or they realise the law enforcement agencies might get to them, they will flee overnight and leave all of their clients penniless. Get rich quick schemes are the most popular type of online fraud and as they quickly jump from targeting one sector to another, it is quite hard to put a stop to their activities.

How to recover money sent to an Investment Fraud?

There are a number of ways which people can use to get money back from scammers. Note that, there is no one miraculous approach to the solution and the process you need to follow depends upon the payment method used earlier. For the vast majority of the transactions, a simple credit card chargeback can come to the rescue of the victims.

In case, if you have made the payment using other methods, then don’t worry as there are ways to track them too. Tracking cryptocurrencies in particular will take time, but thanks to the forensic tools available and on chain analysis, the process is straightforward.

If you have lost money to any fake platforms, then fill out the contact form on our website and let our skilled recovery experts suggest the best way. 

How to know whether an Investment Site is legitimate or not?

This is the million dollar question and there is no one line answer to it. To determine the authenticity or any investment site, you need to take a look at a number of variables such as the legal aspect, information of the owners, transparency and reputation. Let us discuss the factors in detail.

Legal Aspect – All of the legit investment sites will and should be regulated by well known authorities such as the FCA, FTC, ASIC, etc,. The regulation aspect mainly depends upon the location of the company, but in general, if their books aren’t audited by a third party and they don’t offer compensation or insurance plans, then it is better to avoid interacting with them.

In recent times, many fake platforms do feature bogus registration numbers and certificates and that’s why you shouldn’t trust them blindly? Always double check the details you see on any website and never overlook any details, because in the end, it is always better to be safe than sorry.

Transparency – Every reputable financial organisation always tries to please their clients by maintaining transparency. They take pride in showcasing the details of the founders, their employees along with many other things.

On the flip side, all the scam platforms try to maintain a low profile and they always come up with an excuse to hide from the public. So, if you notice any suspicious behaviour along with total lack of transparency, then it is time to walk in the opposite direction.

Reputation – This is a very important factor which we personally consider as the best way to gauge any service. Before making a deposit into any investment platform, always check for their reviews online which will give you utmost clarity about them.

Remember, some scams manipulate the public sentiment by posting a lot of fake reviews from anonymous accounts. However, for the most part, the fake reviews are easy to tell and many big names in the sector such as Trustpilot and Forexpeacearmy also weed out the fake ones which showcases a lot of red flags. 

Report to Authorities

In general, the banks and pretty much every other organisation will not be able to help you recover funds if the amount lost is less than $1000 to Investment Fraud, but that doesn’t mean that you shouldn’t act upon it. Always report the incidents to the relevant authorities such as the Financial Conduct Authority(UK), Federal Trade Commission(US) and your local cyber crime branch.

Though, they won’t look into it immediately, over time it does help them with recognising the patterns used by the criminals.

If you have any questions or need assistance in determining the legitimacy of any business online, then feel free to comment below and let us know the name of the firm. We will gladly do a free background check and assessment for you.