Tips to Know and Avoid Investment Fraud

Tips to Know and Avoid Investment Fraud – Investment, also known as investing money for profit, is an effective way to make your money work. It is one of the best strategic factors in economic activity that is defined as the activity of investing money or assets to gain profit.

Investment is also a good option for your pension savings. It is either financial or business products such as stores, offices or properties investment. 

The wide availability of investment information triggers more investment scams. Make sure we are aware of these illegal practices around us.

Investment fraud is a practice of purchasing stock markets based on false information. The individual who suggests you make a purchase is who actually has your money. Always be aware and careful before starting investing your money.

In July 2020, the Indonesian Financial Services Authority (OJK) revealed 99 illegal investments which secretly operate among societies. OJK performs its duty over financial services to create an order, justified, transparent and accountable activities. The authority is expected to build a sustainable and stable financial system, and to protect the interest of consumers and the public. 

This illegal investment usually takes advantage of people’s ignorance and involves promises of big returns. Learn more about its characteristics to help you avoid investment scams.


Common Traits of Investment Fraud

Referring to an OJK official’s Instagram account, investment scams usually feature these six traits that people should be aware of before making an investment:

Information about investment business process is ambiguous

An investment scam is usually proposed by a company whose track record is questionable. They neither register their company at OJK nor they have credibility to manage the investment funds. Do your own background check on the company you seem interested in.

Avail bonuses for tagging more friends

Investment scammers will usually ask you to get new investors along with you and promise huge bonuses in return. 

Offer high return with no risk

No investments would make such a huge profit in short-term period 

Guaranteed investment and payback

Legal investment never promise fix return and payback 

Use social media to promote

Scammers use social media such as WhatsApp and Telegram group chat to contact many different people, they even use public figure photos to make it more convincing. Illegal investment companies don’t talk about their products in detail. They convince you to send them your money. Investors usually care more about the profit rather than research the products they invest in.     

Illegal investment has no legal permit from the authority

Before you start investing, make sure you research and verify related information about the company.  


Tips to Avoid Fraud

More people claim themselves to be scammed by this illegal investment. Scammers often offer minimum investment with high return in a short-time period.

Fraudsters are expecting you not to investigate before you invest. However, you should learn about their benefits, costs, risks, rights and duties, and the authority who watch their product and company.

Here are some tips to help reduce your chance of being a victim:

  1. Research the company, employees and their investment products
  2. Ask a copy of their marketing and selling plan
  3. High profit is followed by high risks.
  4. Avoid company with ambiguous business plan
  5. Check similar product request in the market

Before starting investing, always learn everything related to your products, how investment should be conducted that avoid you from a big failure. You can also seek for a consultation from the expert.   

Leave a Comment