Despite heightened consumer awareness and education, more and more people fall prey to investment scams and fraud, especially in times of financial desperation. Increased access to technology, coupled with advances in artificial intelligence, means that investment scams are becoming more sophisticated, more cleverly disguised, and more difficult to identify. As a potential investor, there are steps you can take to verify any potential investment before parting with your hard-earned money:
- Returns: Any investment that promises returns that are greater than what investment markets are able to generate should immediately sound alarm bells. If the investment promises to double or triple your money in a short period of time, this should be an immediate cause for concern and a clear signal to back off. Remember, no investment is without risk, so if you’re being offered guaranteed returns at ridiculously high rates, something is not right.
- Jargon: The marketing jargon used by the investment company should also give you clues to its credibility. Fraudulent investments are notorious for including words such as ‘exclusive offer’, ‘select’, ‘elite’, ‘limited offer’ or ‘opportunity of a lifetime in their marketing material.
- Licensed: The investment company should be licensed with the Financial Services Conduct Authority (FSCA) and should display their FSP number on all their marketing material, including their website, business cards, brochures and social media pages. If you’re unsure, phone the FSCA and verify the organisation.
- Bank account: If the bank account of the investment is held in the name of a private individual, be suspicious. If it is a legitimate enterprise, it would hold a business account with a reputable financial institution.
- Physical address: The physical address of the organisation should also appear in all their marketing material, including websites and brochures – but don’t take the printing of a physical address at face value. Use Google maps to look up the address and locate the actual building. Many legitimate companies pin their physical locations on Google maps as an added measure of credibility.
- Free email accounts: If you receive email communication from the investment company that is sent from any free email service such as Gmail, Yahoo or Hotmail, be very cautious. A legitimate investment company would operate off a secure email server and would not allow their customers’ confidential information to free email servers.
- Whatsapp: Any investment opportunity that is communicated with you via Whatsapp should be regarded as circumspect, especially where the message was unsolicited. Besides being an inappropriate platform to conduct investment business on, it is also unprofessional and unsafe.
- Private information: Any unsolicited email, phone call or text message that invites you to participate in a scheme should raise red flags,…