What is Investment Scam?

[ScamShield]

An "investment scam" is a fraudulent scheme where someone deceives individuals into investing money in a fake or misrepresented investment opportunity, often promising high returns with little to no risk, with the goal of stealing their money by using deceptive tactics and false information. [1, 2, 3]
Key points about investment scams: [1, 3, 4]

• High-pressure tactics: Scammers often use persuasive sales techniques to convince people to invest quickly, without doing proper research. [1, 3, 4]
• Unrealistic promises: They typically promise extremely high returns with minimal risk, which is not possible with legitimate investments. [2, 3, 5]
• Lack of transparency: They may avoid providing detailed information about the investment or the company behind it. [1, 2, 3]
• Fake credentials: Scammers might present themselves as licensed financial advisors or use fake testimonials to appear trustworthy. [1, 3, 4]

Common types of investment scams: [5, 6]

• Ponzi schemes: Early investors are paid returns from money received from later investors, creating a pyramid structure. [5, 6]
• Pyramid schemes: Individuals recruit new members to join the scheme, with profits primarily coming from the recruitment fees rather than any actual investment. [5, 6]
• Pump and dump schemes: Scammers artificially inflate the price of a stock by promoting it heavily, then sell their shares quickly once the price drops. [5, 6]
• Boiler room scams: High-pressure sales tactics are used through telemarketing to sell worthless investments. [1, 4]
• Cryptocurrency scams: Fraudulent schemes involving fake cryptocurrency projects or exchanges promising large returns. [6, 7, 8]

How to protect yourself from investment scams: [1, 2, 4]

• Do your research: Thoroughly investigate any investment opportunity before committing money, checking the company's legitimacy and licensing. [1, 2, 4]
• Be wary of high-pressure tactics: Don't rush into an investment decision and be cautious of anyone who tries to pressure you to invest quickly. [1, 3, 4]
• Check for red flags: Watch out for promises of guaranteed high returns, no risk investments, or "insider information". [2, 3, 5]
• Verify credentials: Ensure any financial advisor or investment company is properly registered and licensed. [1, 4]
• Talk to a trusted professional: Consult with a financial advisor before making any significant investment decisions. [1, 4, 7]

Sources:
[1] https://www.tn.gov/attorneygeneral/...mer/resources/materials/investment-scams.html
[2] https://www.nism.ac.in/beware-of-investment-scams-2/
[3] https://www.staysafeonline.in/concept/investment-scams
[4] https://dfi.wa.gov/financial-education/information/steps-you-can-take-avoid-investment-fraud
[5]
[6] https://www.rblbank.com/blog/banking/safe-banking/investment-fraud-how-to-safeguard-your-finances
[7] https://www.investright.org/avoid-fraud/types-of-investment-scams/
[8] https://www.cftc.gov/LearnAndProtect/forexfrauds