5 Common Types of Investment Scams and How to Spot Them

Scams are not limited to banking transactions and payments only. There are different types of scams that are used to lure traders and investors into traps. If you are into forex or bitcoin exchange then you need to be aware of 5 types of scams that are circulating in the market right now. Different types of scams are conducted in different ways so most of the time the victims don’t realize the situation until it is too late. Stay up to date about these common types of scams that can cost you money and fortune.

How to Spot a Scam

If you want to prevent from falling into a scam then you need to know about the warning signs. Scammers can manipulate and instill trust into people by telling them certain stories. If you want to spot a scam, just keep an eye on the following warning signs:

  • You receive notification of transaction in your email.
  • The received payment is for large amount, and no further details are provided.
  • You are requested to give personal information.
  • You are asked to pay in a certain way in an unusual way, and to use specific methods to get the money.

The Ponzi Scheme

According to Benjamin Ross in his book How To Avoid Getting Scammed in Forex, “A Ponzi scheme is a type of scam wherein fraudsters promise unrealistic financial returns in the short term, but don’t cover their own financing costs or dividend payouts”. These scams promise huge returns and the victims feel so thrilled and happy for their investment. But once the crooks take your money, they divert it into other things. These types of scams are highly risky because they cannot cover the needs of the investors. This is the type of fraud that promises investors with huge profits. These crooks offer to match their purchases and sales so that they can increase their profits.

Forex and Bitcoin Scams

The Forex and bitcoin scam is the easiest kind of investment scams to understand. The fake crypto currency websites can trap you with false news and fake exchange rates. It is a common technique that is used by fraudsters. The fraudulent website may flash stories and images about the high returns of forex or bitcoin investments. They also boast about their low commissions and low minimum investment. They might show advertisements with logos and celebrities, or include endorsements from trusted crypto currency and forex investment experts. These fraudsters promise to invest your money with fake or abandoned forex and bitcoin exchanges.

The Nigerian Prince Scam

This is one of the oldest and common types of investment scams that are not far behind in the list of the top scammers. What makes it different from other scams is that instead of conning you for millions, it makes you lose millions. This scam also masquerades as a 419 scam which means it is more like a Nigerian Prince scam. The criminal only asks for payment on the condition that he will bring you the riches with which he has acquired. He asks you to deposit large amounts of cash into the Nigerian bank account, which is supposedly his. It is a worldwide scam that works by investing money into a company, but you will never get your money back.

Investment Fraud

If you have an investment account then it is time you read up on investment fraud scams. You should be aware of investment frauds to avoid falling prey to the swindlers. The face value of the investment may seem good but it’s all done to divert your money. Scams can be created to divert your money into other scammers’ pockets. These investment scams can result in significant loss. Investing in cryptocurrencies is a high risk investment, so be careful. Keep your investment confidential and make sure you know all the latest scam tactics. Crypto phishing This is one of the most dangerous types of investment scams that are going on in the market now. Crypto phishing is one of the most dangerous schemes which steal your money or private information.

Social Media Scams

A recent social media trend that has emerged is the use of Instagram to scam money. With its photo-sharing platform, these fraudsters take advantage of a person’s excitement or skepticism in order to convince them to deposit large amounts of funds in order to become “first-wave adopters” of certain cryptocurrencies. The reason you’re asked to deposit money is to be able to join a private group so that others can see your activity and level of interest. If you’re already part of the first wave of people in the group, then they know they’re getting scammed. If you’re not already part of the group, they may know they’re being scammed and will have second thoughts before they deposit anything.

Table of Contents