Online Investment Scam Preventive Methods: How to Avoid Becoming a Victim

Scam Prevention Methods

Compared to the last few decades, today the daily cost of living has considerably increased.

Many people believe that even with full-time employment, they still will never have enough money to pursue their dreams.

This is why investments have grown more popular nowadays. Unfortunately, there are people who take advantage of those who want to grow their money and reach their financial goals.

Scams and fraud have become increasingly prevalent over the years as more people turn to technology and the internet for convenience.

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In an investment fraud, scammers use false and misleading information to manipulate an investor into making a wrong sale or buying decision.

Ponzi and pyramid schemes, for example, are fraudulent and deceptive strategies that violate national and international laws of security and typically result in investor losses.

Therefore, keeping yourself aware of scam and fraud warning signs is essential to ensure safety against such fraudulent acts. Similarly, understanding the risks and performing risk management with a trusted company like the Mount Equity Group is an excellent first step in protecting your money from falling into the wrong hands.

Investment Scam Index: Online Scam and Fraud to Watch Out For

Scammers nowadays have developed tricks and misleading strategies to lure individuals into investing in fake schemes. Unfortunately, reports of victims continue to spike because of the continued use of unsafe online platforms. The following are some of the most common types of investment frauds to watch out for: 

Advance Fee Scheme

In this type of investment fraud, scam artists demand investors to pay a fee upfront before the investment can push through. They can refer to it as a fee, commission, or other reimbursable expense. Scams such as found money, investment opportunities, and lottery winnings are commonly involved in this scheme.

Internet Frauds

Scammers target investors who have already bought undervalued investments with the promise of selling their shares at a higher rate if an “advance fee” is paid.To give fake assurance and add an air of credibility to their fraudulent schemes, scammers often direct investors to wire advance payments to phony lawyers or escrow agents.

High Yield Investment Programs (HYIP’s)

High Yield Investment Programs are unauthorized investments managed by unlicensed brokers. The majority of them, according to the SEC, are scams. This type of scam promises high returns with little or no investment risk to the investor. These sales pitches are also used in several high-profile bank frauds.

In reality, these high-profit investment offers are just Ponzi schemes, with the organizers attempting to rob investors of their money. Funds from new investors are used to pay dividends to existing investors in a Ponzi scheme.  Money is not invested as promised, and no actual returns are attained; instead, new money from late investors is used to compensate people who joined the scam earlier.

Microcap Fraud Strategy

This typically entails aggressive, uninvited stock promotions. They work in a similar way to a pump-and-dump system. Scammers may be attempting to convince investors to purchase stocks to benefit at the investors’ expense.

Penny stocks linked to dormant shell firms, businesses that have undergone many name changes, or a sudden, unexpected increase in stock prices are all signs of this fraud.

Microcap stocks (low-priced stocks issued by the smallest companies), like penny stocks (lowest-priced stocks), have little information available to the public. Due to this, fraudsters can spread false information more effectively in this type of scheme.

Prime Bank Investments

In this type of scam, swindlers convince investors that their funds can be used to purchase and sell “Prime Bank” financial instruments. Promoters use complicated, technical, and official-sounding terminologies to make the schemes look legitimate.

Debentures, standby letters of credit, bank loans, an offshore trading scheme, a high-yield investment program, or a combination of these terms may be used to characterize the investment.

Promoters of Prime Bank investment schemes also assert that these types of investments are only available by invitation and are only accessible to a small group of wealthy customers. If prospective investors ask for references, they claim confidentiality as a reason not to disclose any, and they will ask investors to sign non-disclosure agreements.

Extra Precaution Tips to Avoid Investment Scams

  • Do some research about the company on different websites using keywords such as the promoter or seller’s name, company, or investment name to ascertain the investment or company’s legitimacy.  
  • Unsolicited fax or emails promising investment opportunities that generate easy money should be avoided. If the offer seems too good to be true, then it most probably isn’t true at all. 
  • Be knowledgeable about investment terms and conditions.
  • Learn the different types of online investment scams and frauds. Find out ways to protect your online identity and social media accounts. 
  • Be wary of flashy websites that promise “guaranteed returns” or quick profits. Any investment that claims you’ll get high yields is risky. 
  • Trust only licensed brokers or managers regulated by the Securities and Exchange Commission.
  • Secrecy is a red flag. If the promoter cannot explain the investment process, that’s a warning sign that the investment is potentially phony. 
  • Be suspicious of investment sellers that pressure you to invest quickly and pay advance fees.
  • Check available records or backgrounds of the seller or company promoting the investment. 

Keep Yourself from Getting Victimized by Investment Scams with Mount Equity Group Japan

Investing is an important step to take if you want your money to work for you and reach your financial goals.  It is one way to take control of your financial future and security. Moreover, it helps you build your wealth while maintaining an extra stream of income which you can use even before retiring.

Unfortunately, reports of investment scams and frauds are constantly spiking. You can be a target of such fraudulent acts, so it is crucial to take action and protect your money. Mount Equity Group Japan can help you safeguard your hard-earned funds. 

We have financial experts who offer trusted and high-quality advice on growing your money. Moreover, we ensure reliable and legitimate services to shield you from investment scams. At Mount Equity Group, we prioritize your financial security. Trust us to grow your funds now!