How Investment Scams Work And How To Avoid Them

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How investment scams work and how to avoid them

Are you looking for low-risk, high-return investments that can make a profit quickly? Beware of falling victim to investment scams!

What are investment scams?

Investment scams are designed to deceive individuals into investing money in fake opportunities, such as cryptocurrencies and A-shares trading that don't exist.

There are various types of investment fraud. They often result in significant financial loss, theft of sensitive personal information, or unauthorised access to online banking.

Different kinds of investment scams

Unsolicited offers

Scammers may pretend to be celebrities on social media or in chat groups, including Instagram, Facebook, WhatsApp, Tinder and Telegram. They share fake insider tips or develop an online romantic relationship with the victims to lure them into opening accounts and transferring funds on fake investment platforms.

Fake websites and portfolios

Fraudsters set up fraudulent websites and portfolios that look genuine to promote fake investments with unrealistically high returns.

Bank employee impersonation

Scammers may pretend to be bank employees and offer fake investment opportunities. They may also claim that an account is frozen and under investigation, urging victims to transfer money to a specific account.

Monetary inducement

Fraudster may pay victims a small amount of returns to build trust and encourage them to further invest. But in the end, victims are unable to withdraw any money and suffer financial loss.

Apart from the above, fraudsters may also steal sensitive personal information. They may even remotely control bank accounts using fake investment apps that contain malware to conduct unauthorised transactions.

Spotting red flags of investment scams

Too good to be true

Being offered low-risk, high-return investment opportunities that seem great but can't possibly be real.
Pressure tactics

Scammers often create a sense of urgency, pressuring victims to invest quickly without giving them time to research or think carefully.
Suspicious transfer requests

Being asked to transfer money to an unknown third-party account.
Withdrawal issues

When victims make a profit and ask to withdraw money, the administrator of the fake platform will make up excuses, like claiming that the account is frozen or asking for extra charges to process the withdrawal.

How to prevent investment scams

Carry out thorough background checks on investment referrers, the products, and investment platforms. Verify their claims and identities through official channels.
Consult chartered professionals and refer to the Securities and Futures Commission (SFC) website for a list of licensed or suspicious virtual asset trading platforms.
Never allow anyone else to set up an investment account, upload ID documents, or manage investments on your behalf.
Avoid disclosing sensitive personal information or downloading apps that may contain malware. Fraudsters can use them to access your devices and transfer money without your knowledge.
Be cautious if you're asked to transfer money and mislead your bank about the reason for the payment. Fraudsters use such tactics to avoid scrutiny.
Never transfer money to an unknown account. Use the Hong Kong Police Force's Scameter or Scameter+ app to check suspicious phone numbers, URLs, or receiving accounts.