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Küberturvalisus - 30.07.2020

How to detect investment fraud

How to detect investment fraud Photo: SEB

Cyber-fraudsters are operating online and by phone, promising quick and big profits to their victims. But unfortunately, instead of the quick and big profits, the victims of the frauds will lose their savings. How to recognise a fraudulent scheme?

Fraudsters promise quick and big profits

Criminals try to convince you that you can become rich in a heartbeat. They may offer possibilities of earning income through different investments, stocks, bonds, crypto-currencies, or precious metals. You may also be offered the chance of buying land in a foreign country or investing in rapidly growing alternative energy sources.

The asset type of the offered investments does not matter. The common characteristic is the promise of financial gain without any risks. Often, criminals tempt their victims with promises of multiplying their initial investment in a short time. The fraudsters affirm that there is no danger of losing the money. You should keep in mind that all investment decisions involve risk. The higher the promised profit, the higher the risk of the investment.

Criminals try to pressure fraud victims to make investment decisions as quickly as possible. It is a well-known trick used by fraudsters. The chosen victim is pressured into making a rapid decision, which does not allow the victim to consult an expert or assess the situation in a calm and rational manner. The cyber-fraudsters may claim that the stock market from where the stock should be bought will close soon and the profitable investment option will be lost. They threaten to offer the investment option to someone else and leave you without any profit.

If a fraudster has given you some time to consider the offer or collect funds, you will be asked not to tell anyone about the investment option. Supposedly, the offer is made only to you and should you spread the word, the right to invest will be taken away. The criminals may also attempt to convince you that by talking about the investment opportunity, you will spread the word and competitors will take advantage of the opportunity.

What to do when you receive an investment offer?

Of course, you should not suspect that all investment offers are potential frauds. Yet, it is better to approach each offer carefully than to lose money to cyber-fraudsters.

• After receiving an investment offer, consult an expert, for example, by turning to your bank.
• Do not let yourself be pressured into being silent about the offer and discuss it with your friends and family.
• If you are offered the possibility of investing through a fund or some company, check whether the fund or company has the licence for investment activities on the website of the Bank of Estonia.
• Keep in mind that experienced investors can grow their investments by a few to about ten per cent per year. If you are offered a chance to multiply your investment in a few months or even a year, it is a red flag. Such an investment is too good to be true.
• You should also not believe any stories about secure investments and guaranteed profit. Nobody can promise you that. All investments involve risk. The higher the promised profit, the higher the risk of losing the money.
• In addition, it is important to exclude repeated investment invitations. You should know that if you have fallen victim to a fraud, you may receive fraudulent calls also in the future. For example, your information may be sold to other fraudsters.
• Keep in mind that if you receive a suspicious investment offer, you should turn to the police. It not only protects you but helps to prevent frauds in the future.



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