How To Spot An Investment Scam

How To Spot An Investment Scam

Key Takeaways

  • All investments carry risks. Always check before you invest!

  • Check for red flags. Be wary of opportunities that offer high returns at little or no risk.

  • Check that the company and its representatives are regulated by the Monetary Authority of Singapore (MAS).

Out of nowhere, you are added to a group chat where people are sharing their windfall from a not-to-be-missed investment.

Or you are contacted on social media, who asks if you are interested in a lucrative investment opportunity.

It could even be an ad you chance upon on social media platforms touting profitable "investment opportunities".

Sounds familiar?

Most of us would have read about news reports of people who were scammed through such methods. Nevertheless, people continue to fall victim as scammers constantly come up with new, convincing ways to steal what is often very large amounts.

In many instances, victims thought they would never get scammed – sometimes they use the profits they receive initially to refute disbelieving loved ones. But criminals have become extremely skilled at convincing people that get-rich-quick scheme is real and high returns are within easy reach.

Always remember to Check Before You Invest if you want to safeguard your hard-earned money! Here's what you should check:

Check For Red Flags

Scammers use sophisticated tactics to get you to part with your money. There are red flags you can watch out for to steer clear of investment scams.

High Returns At Low Or No Risk

Be wary when you encounter an investment opportunity that claims to guarantee or protect your capital while promising high returns. The greater the promised investment returns, the higher the risks should be. Many investment scams use lucrative promises to lure investors in

Pressure Tactics

  • "Limited time only! Invest before it sells out!"

  • "Special rates for first 50 investors. Don't miss out on this golden opportunity!"

  • "More than 2,000 people have invested - what are you waiting for?"

  • "Invest today and get extra 10% credit with many other benefits."

Limited offers, timed gifts or rebates, are common tactics in investment scams to rush you into committing your money.

Make sure you fully understand what you are buying into instead of focusing on the carrots dangled.

Offer Of Commissions

Legitimate investment schemes generally do not offer commissions to investors for referrals.

Investment scams use such incentives to encourage existing customers to bring in their friends and associates to quickly enlarge their investor base.

Fictitious Track Records

Investment scams may claim to have many years of experience, multiple accolades or simply large investment profits to gain trust.

Some use testimonials from "satisfied customers" to shore up their credibility.

You should approach claims with healthy skepticism. Where possible, verify the claims with an independent third party.

Check That The Entity Is Regulated

Some investment scams may even claim to be regulated by the relevant authorities to mislead you.

Confirm such claims by checking the resources on the Monetary Authority of Singapore (MAS) website.

  • Financial Institutions Directory - a list of financial institutions regulated by MAS and the regulated activities they are authorised to provide

  • Register of Representatives - a list of individuals who conduct activities regulated by MAS

  • Investor Alert List - a non-exhaustive list of persons unregulated by MAS who may have been wrongly misperceived as being licensed or authorised by MAS

Remember, dealing with an unregulated entity means giving up the safeguards offered under the laws administered by MAS.

Check On The Company's Background

Do not be too quick to believe everything you are told. Verify information provided by the entity about themselves or the investment opportunity, such as the background of representatives and the entity's track record.

It is also important to ask the entity as many questions as you need to fully understand the investment opportunity. If it is unable to answer or avoids answering any of your questions, be wary.

If you suspect that you are a victim of scam, inform your bank and file a police report immediately.

Tell your family and friends about investment scams so that they do not fall prey to them.

Remember, if an investment sounds too good to be true, it probably is.

Safeguard Yourself Against Scams

To ACT and safeguard yourself against scams:

ADD:

  • Privacy settings to your messaging app to avoid being added into unknown chatgroups

  • Security features such as 2 or multi-FA for banking apps, transaction limits on payment accounts (bank, PayNow, PayLah)

  • Money Lock to your bank accounts to further secure a portion of your savings

CHECK:

  • Resources on the MAS website (i.e. Financial Institutions Directory, Register of Representatives, and Investor Alert List) on whether the company offering the investment opportunity is regulated by MAS

  • With someone you trust about the offer

  • Call the ScamShield helpline (1799) to check if you are unsure

  • Call the official hotline of the company to check if this investment product is legitimate

TELL:

  • Warn friends and family about this scam encounter

  • Report and block suspected scam accounts/ chat groups

  • Call your bank immediately and make a police report if you think you have fallen victim

For information on other scams and how to safeguard yourself against them, you may visit scamshield.gov.sg.

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Phishing Scam