In this post I look at how to spot an investment scam. The promise of easy money to be made, alongside the trappings and lifestyle that can be afforded, is a huge pull for a lot of people. Even moreso in these turbulent times.
As some scramble to make ends meet, the opportunity for earning easy money may seem divine inspiration, but easy money scams have been running since the dawn of time – it’s just the methods have changed.
Recently I was approached by by a very polite individual through this very blog, enquiring about mutual promotion of each other’s content. Of course, sharing content and promoting fellow bloggers content is often how we grow, so this wasn’t an unusual approach.
One look at his content told me to stay well away. What I was being asked to promote was plainly a scam.
Now, I’m not saying this man was deliberately trying to scam me – it could well have been that he was seduced into promoting this material without understanding what he was doing, so I will stop short of that accusation, but in any case there were many things about his product that stood out to me as being questionable. So much so that I thought I should share my thoughts. Needless to say, I thanked the individual for reaching out in the first place, but after reviewing their material I didn’t wish to progress this partnership any further.
I never heard from him again.
So anyway, how do you spot a money making scam. If the opportunity you are being presented with suffers from more a few of the following points – there is a good chance someone is trying to scam you. Please beware.
1. Baffled By Science
The opening gambit of the scammer is to set the scene. They will do this by presenting an apparently perfectly plausible situation or opportunity in an area where you are unlikely to be an expert.
Some statistics or general observations about the industry being presented will be offered up and it’s up to you to take them at face value or go and investigate.
Since we will assume the targets of a scam are already leaning towards opportunities and want to find something to get involved with – confirmation bias will play a part.
Confirmation bias is the tendency to search for, interpret, favour, and recall information in a way that confirms or supports one’s prior beliefs or values. People tend to unconsciously select information that supports their views, but ignoring non-supportive information.
Wikipedia
Once you are listening to what they have to say… the scammer moves on.
2. No effort required
One of the biggest red flags you should look out for are the claims that you won’t be required to expend much effort to make this work, anyone can do it and no prior knowledge is needed.
In all my years on this earth I have never been involved in anything where I achieved any kind of good result with significant effort!
Even learning to walk… I’m sure I was rubbish at that when I started, although I’m pretty good at it now after more than 40-something years!
My point is this. There is no short-cut. We all wish there was, and a scammer will prey on that wish. Don’t be fooled.
3. Proof of historical success or why this product will work where others have failed
Quite often statistics will be presented that are likely unverifiable through independent research, and once again the victim will have to take this data at face value. Often this sort of past performance or promise of future success will be accompanied by some kind of “don’t miss out” message.
“Wouldn’t you like to be part of this opportunity?” or “That could have been you!”
4. Low risk, high returns.
Another huge red flag. Low risk and high returns simply don’t exist. It is not possible to make a small investment and reasonably expect it to explode into something enormous. Again, we all wish we could discover the recipe for this secret sauce and the scammer know this.
Alongside this low risk/high return fabrication sits the claims of exorbitant profits in a short space of time. Take for example this specific opportunity I was asked to promote. It was claiming profits of up to 15% per week were possible, but to expect something between 5-13% per week.
Let’s go with an initial £100 investment. Take a look at the table below to see what you investment could be worth.
| Time Invested / % return | 5% | 8% | 13% |
| 1 year | £1,273.13 | £5,531.10 | £58,568.48 |
| 2 years | £16,208.51 | £305,930.71 | £34,302,671.27 |
| 3 years | £206,354.77 | £16,921,334.86 | £20,090,553,976.26 |
Yes. That last figure is twenty billion. That’s not a typo.
I think it’s fair to say that those figures are just preposterous, even at the low end!
When you listen to what the scammer is saying, you might think that in isolation a profit of between 5-13% in a given week is possible, but to do this consistently over time without any losses….? You quickly come to see what this would actually mean and you realise the whole thing is so ridiculous that at this point you should be walking away. But… if you don’t think it through then the scammer has you hooked and it’s time to back up those claims.
5. Fake Credentials
Another huge warning sign.
The scammer will tell you that their product has been created by a crack team of specialists or has been audited by world class individuals and there may even be a couple of names thrown in there for good measure. Usually, there is nothing specific. It is a load of nonsense and should be treated with the contempt it deserves.
The fact there is nothing specific in anything they are saying means there is no substance to it. It is a stream of vague waffle intended to give some kind of legitimacy to what they are saying, but there is nothing legitimate here.
However, if the scammer got you to swallow the numbers in the step before, then it’s likely you aren’t even listening any longer and you are ready to sign up. Don’t sign up!
6. Invite to a live webinar or presentation
If you are invited to click a link for a live webinar to find out some more information, you will probably find there is one starting within the hour and often much sooner! There is of course, no live webinar – it’s some pre-recorded production and the countdown to the next live webinar is fake, designed to induce a sense of urgency for you to act. The scammer may indeed have recorded something that looks live, but be sure, there is no live seminar happening at 3.30am in the UK (roughly the time I began to prepare this post… but that’s another story!)
It’s not even the issue of a presentation that bothers me on this point. It’s the idea that it is being made out to be something it isn’t. There is no need to lie to talk up an opportunity or a product if it is indeed as good as it is claimed to be.
This embelishment or misdirection just increases the suspicious nature of the claims.
7. Terms of payment
Scammers love to be paid in weird and wonderful ways. Amazon vouchers, money transfers, even crypto currency. If you are being asked to pay for a product in any of these ways the chances are the scammer is trying to take payment in a relatively anonymous and irretrievable state. Anyone who cannot provide proper, regulated and verifiable payment terms should be avoided.
8. Fake reviews
There will likely be accompanying testimonials. “Peter from England”, “Sarah from Wales”, or maybe even as specific as “John Smith” from London! Like most of the so called information presented these testimonials are likely to be entirely fictitious. More made-up unverifiable nonsense that just reinforces my mantra of never trust a stranger on the internet.
Summary
In summary, never trust anything put in front of you by someone you don’t know or didn’t ask for. Always do your own research on anything you find on the internet or anywhere else for that matter. If something sounds like the stuff of dreams, it likely is. Don’t be afraid to ask questions both of the person contacting you and of your friends and family. Some times it helps to say these things out loud to someone else to get a feel for how sensible it really sounds.
Be safe!