How to Spot and Avoid Investment Scams

By Rotimi Onadipe

Investment scams are strategies used by fraudsters to lure unsuspecting investors into investing their money in a fake business that appears to be real.

In most cases, they come with interesting and convincing stories of high profits with little or no risk. They may come in form of real estate, import and export, farming, buying and selling of products etc.

The most common types of investment scams are:

1. Pyramid schemes: This is when fraudsters claim they can invest with little amount and make huge profits within a very short time with little or no risk.
2. Ponzi schemes: In Ponzi schemes, scammers collect money from new investors and use it to pay profits to those who invested earlier rather than investing the money as promised to the unsuspecting investors.
3. Advance fee fraud: This is a fraud in which individuals, companies or organisations are asked to pay a certain fee before receiving some promised products, services or money.

In today’s internet age, our ignorance about how to spot and avoid investment scams may put us at risk of being vulnerable to any kind of investment scam.

As internet users, our need to stay online for various reasons exposes us to many online dangers on a daily basis.

We must be informed that the people we trust so much e.g. our neighbours, business partners, friends, family members etc. may present a business proposal to us without realising it is a scam. This is why it is very important for us to educate ourselves about how to spot and protect ourselves against investment scams.

How to Spot Investment Scam

1. It comes with a sense of urgency.
2. The story sounds too good to be true.
3. It involves unsolicited calls and emails.
4. The scammers use a lot of media platforms to advertise.
5. The scammers don’t want their victims to know their identities or how they can be located.
6. It comes with a promise of huge profits with little or no risk.
7. At first, they will tell you it’s free but they will demand money later.
8. The scammers call you severally to convince you.
9. In most cases, they use a personal bank account for their transactions.
10. The scammers have more than enough testimonies to back up their claims e.g. testimonies from fake investors.

How to Avoid Investment Scams

1. Don’t believe everything you see online.
2. When the story sounds too good to be true, be suspicious.
3. Beware of unsolicited calls and emails with investment proposals.
4. Always request a video call with anyone that wants to have any business transaction with you online.
5. When you are in doubt, share your experience with friends, neighbours, co-workers, counsellors or anyone around you.
6. Find out if the company is legally registered.
7. Find out if the company has integrity before you invest your money.
8. Be suspicious when you notice errors in spelling and grammar used in the texts or emails sent to you.
9. If you think you have fallen victim to an investment scam, report immediately to your bank and law enforcement agencies.
10. Educate yourself on how to spot and avoid investment scams.

Rotimi Onadipe is the CEO of Onadipe Technologies and founder of Internet Safety Magazine