Investment scams Spotting high-risk investment scams
Investment scams tempt you to buy high-value goods such as artworks that will increase in value
High-risk investment scams all have one thing in common: high returns. A promise of unrealistic returns at little or no risk is a hallmark of a high-risk investment scam.
Scammers claim to have special insight or expertise in financial matters and the market they're asking for investments in. The approach will almost always be unsolicited and out of the blue.
Tips on spotting an investment scam
Unlike other scams, which almost always contain the same recognisable elements, the details of any two high-risk investment scams are rarely the same. However, investment scams often include:
- buying high-value goods such as artworks, wine or precious stones that will increase in value
- the opportunity to buy land or property that will increase in value and can be sold on at a profit
- the chance to buy shares in a company you've never heard of
- an offer from scammers to buy shares you already own at inflated prices
- unsolicited phone calls pushing high-return investments, often in overseas markets and companies
- high-pressure sales seminars – scammers profit through attendance fees paid by victims and by selling property and investments at inflated prices
- a tip on a stock about to launch which is ‘guaranteed’ to rapidly rise in value.
Investment scams: what to look out for
Scammers tend to be vague about the underlying methods used in their investment programmes and how high returns can be sustained. If the investment mechanism is explained, it may well be overly complex and designed to bamboozle potential victims into thinking that the scam is authentic and capable of delivering unusually high rewards.
Investment scammers usually claim their schemes are the ‘best kept secret’ in the banking industry and only available to a privileged few.
You may be offered ‘trade secrets’ or an ‘inside deal’. Scammers may also pile on the pressure, offering the deal for a very limited time, or even on immediate sign-up basis.
Many high-risk investment scams include companies consumers won't have heard of (and that may not actually exist). Investments are often offshore and billed as a way to pay less tax on the high profits you will make.