"Get 12% assured returns on a monthly basis!"
“Earn 120% annual returns with zero risk!”
These are some of the classic hooks used by fraudsters to lure unsuspecting investors with promises of extraordinary returns. Sadly, these scams often target regions with low financial literacy, like the Northeastern parts of India.
Recently, Guwahati Police arrested several individuals who scammed people out of thousands of crores. These fraudsters, disguised as stock market experts, convinced people to invest with them by promising guaranteed high returns.
Let’s take a closer look at some of the tactics these scammers use, and most importantly, how you can safeguard yourself from falling into their trap.
The first red flag is when these ‘so-called’ experts ask you to deposit money into individual bank accounts instead of creating an investment account. These people will claim that direct payments will bypass middlemen and reduce fees which makes it sound appealing. However, when they take money in their personal accounts, it makes it easier for them to disappear with your money easily.
Hence, it is essential to verify the credibility of the financial institution and ensure you're paying into a legitimate account.
Before transferring any money, do thorough research on the company or individual you’re dealing with. A quick search for reviews, complaints, or negative experiences could save you from being scammed. Remember, legitimate companies will never ask you to make payments into an individual’s bank account.
One of the most common tactics used by scammers is guaranteeing high monthly returns—often as much as 10-12%. They also mention that they don’t have to take any of the risk associated with stock market and trading. Investments that promise high returns with little to no risk are almost always fraudulent.
However, most of us are aware that every investment including low risk investment options carry risk.
Hence, it is important to ask detailed questions about where the money will be invested and how such returns will be generated. Be especially cautious if the answers seem vague or overly complex.
Fraudsters often ask for large sums of money, presenting the opportunity as a once-in-a-lifetime chance that is only available to serious investors. This sense of exclusivity and urgency is a deliberate tactic to make you feel pressured into acting quickly. You may be told that the opportunity is only available to a limited number of people, increasing the fear of missing out (FOMO).
In such cases, it’s vital to take a step back and assess the situation logically. Ask why this opportunity requires such a large amount of money and compare it with similar investment opportunities. If others don’t require such a high commitment, this should raise concerns. Avoid making decisions in haste, especially when large sums of money are involved.
Scammers know that creating a sense of urgency can lead people to make impulsive decisions. By using phrases like “limited-time offer” or “act now before it’s too late,” they put pressure on investors to act quickly without fully understanding the investment. The fear of missing out can push individuals to make hasty decisions, often leading them straight into a scam.
It's important to remember that legitimate investment opportunities don't require immediate decisions. Take your time to review the investment, consult with trusted financial advisors, and weigh the pros and cons carefully. If the opportunity is genuine, it will still be available after you've done your research. Scammers, on the other hand, rely on people rushing into decisions.
Another common tactic is showcasing fake success stories of people who have supposedly made substantial profits. Fraudsters will often provide glowing testimonials from people who don’t even exist or who are actually part of the scam. These stories are designed to make you believe that others have profited, encouraging you to follow suit.
It’s essential to verify any success stories by asking for documentation, credentials, and contact information that can be cross-checked. If you're unable to fact-check these individuals, you should be extremely cautious.
These people often use images of a luxurious lifestyle to attract investors. They may flaunt expensive cars, exotic vacations, and lavish homes to create the illusion that their investment strategy leads to extraordinary wealth.
And, who doesn’t want that?
Instead of focusing on the lifestyle being portrayed, focus on understanding the investment itself. How does it generate returns? What is the risk involved? Analyzing the investment on its merits, rather than being dazzled by the promise of luxury, will help you avoid falling into this common scam.
These people are skilled at preying on human weaknesses, particularly greed and vanity. They know their victim’s trigger points and focus on that.
If you find yourself eager to show off your supposed future investment gains, it may be a sign that you’re being manipulated.
It’s essential to remain level-headed when considering any investment opportunity. Don’t let emotions cloud your judgment. Instead, always research the opportunity and consult a financial expert to ensure it’s legitimate.
In conclusion, the best way to protect yourself from financial scams is to remain vigilant. Always conduct thorough research before making any investments, follow your instincts, and seek out reviews from credible sources. If you’re ever in doubt, consult a professional financial advisor before transferring any money.
Rahul Agarwal is Director of IntyGritty Money Tree
