Investing in stocks and shares or any other commodity can be a successful way of making money. However, it can also lead to people losing their entire life savings. Criminals will persuade you to invest in all kinds of products. They will offer you high rates of return, particularly over longer periods of time, which often do not exist.
Often, initial investments will yield small returns as an incentive to invest further funds. However, larger investments or cashing out will be met with excuses or a penalty charge. Eventually contact with the fraudster will be impossible and all funds and returns are lost.
Fraudsters are organised and they may have details of previous investments you have made, or shares you have purchased. Knowing this information does not mean they are genuine.
Criminals may direct you to well-presented websites or send you glossy marketing material. These resources do not prove they are a genuine company. Many fraudulent companies have a polished customer image to cover their illegal activities.
The fraudster may put pressure on you by offering a ‘once in a lifetime opportunity’ or claim the deal has to be done quickly to maximise profit. If could be a scam if you’re pressured to act quickly. Common types of scams are:
Cryptocurrency Scams
Cryptocurrencies are digital currencies and cryptocurrency investment scammers are convincing. Bitcoin is the most well-known form of digital currency. Scammers may advertise or post on social media offering great returns from cryptocurrency trading. If you click on the advertisement or post, the scammer will contact you or you will be directed to a fake website. The scammer will offer to make an investment on your behalf, or provide details of an app or website through which you can invest.
The scammers will encourage you to buy cryptocurrency through an exchange or request you send money to a company for them to do so on your behalf. They will then claim to either trade on your behalf, or coach you through making trades yourself. You will be able to see the profits you have made on a webpage, app or custom MetaTrader platform.
The data you can see will be fake and will show you profiting (or losing as a way to get you to invest more money). Eventually you will be unable to withdraw any money. The scammers will make excuses for delays in withdrawals, you are banned from the platform or the trading platform is closed. When you try and find out what has happened, the scammers cannot be contacted and your money is gone.
Romance Baiting
The scammer sets up a fake dating profile and will connect with you on a dating website, dating app or social media. The scammer will ask to continue chatting to you off the dating website or app, typically on a free but encrypted chat site such as WhatsApp, Google Hangouts or WeChat. They may say they want to do this as these chat sites are ‘more private’.
Scammers will try to build your trust and will often do things like express strong emotions for you in a short period of time and share lots of ‘personal’ things with you.
Once they have gained your trust the scammer will tell you about an investment opportunity. Often, they say they have invested a small amount of and made a lot of money very quickly. They will encourage you to initially transfer a small amount of your own money to show how easy the investment is. You may see a quick return. The scammer then encourages you to invest larger amounts.
The scammer will tell you to top up your accounts to increase your profits. If or when you run out of money to transfer or want to withdraw all your funds, the scammer will cease all communication. You will then be unable to obtain your investments from the platform or be told the investment has gone wrong.
Celebrity Endorsement Scams
Scammers use the image, name and personal characteristics of well-known celebrities without their permission, to entice you into investing. Fake celebrity endorsements are often used to advertise scam cryptocurrency schemes.
The way the celebrities’ image is used can take two forms:
The investment adverts or news stories make claims about investment opportunities with huge returns and will typically link to a scam website, often involving a cryptocurrency investment ‘opportunity’.
Ponzi Schemes
Ponzi schemes are scams that use funds collected from new investors to pay existing investors. No real investment exists and eventually these schemes collapse. Scammers contact people on social media asking them to download or invest through apps. They promise you will see high returns very quickly and you will think you do, but the scammer uses money other people have invested to pay you some return.
Once you have seen a return, the scammer will persuade you to encourage your friends, family and colleagues to invest in the same scheme. They will pay them ‘returns’ and ask them to recruit people they know into the scheme as well. Eventually, when the scammer runs out of money or the pool of people being recruited dries up, the scammer will disappear and no one will be able to recover their money.
Here are some tips for recognising investment scams.
Bank of St Helena would not contact you to discuss investment schemes outside the available Savings Accounts.
Always remember, if something seems too good to be true it probably is. If you are promised ‘guaranteed returns’ this is a warning sign.
You receive a call, email or message on social media from someone offering unsolicited advice on investments.
Never take investment advice from someone you meet on social media or any communication platform.
These are usually fake. Celebrities rarely discuss their investments or financial decisions in public.
Scammers may claim this is for security reasons, or because they are an international company.
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