3 Common investment scams you should avoid


Have you been a victim of an investment scam? Even if you’ve spotted the warning signs, you’ve likely seen the various investment scams that circle the internet.

Some are easier to spot than others, making it challenging to know what is real and what is fake anymore.

A report from the Federal Trade Commission found that roughly $1.48 billion (yes, that’s billion) to fraud in 2018. That was a 38 percent increase from 2017. Interestingly enough, the report found that only 15 percent of those who lost money were in their 70s, while almost half were in their 20s.

Unfortunately, in times of trouble with the global pandemic, more scams appear. To help you spot a scam from something real, we have a list of three common investment scams you should avoid.

Using Unregulated Trading Platforms

A common scam that anyone can fall victim to is through unregulated trading platforms. Not every platform and company are regulated, which is a huge red flag. If they cannot show their licensing and regulations, and have offshore ties, it’s best to stay away.

To avoid getting scammed on a trading platform, use trusted and regulated companies. Many out there showcase all of their licensing and regulations on their website, making them the better choice. Take a look at this list of the best ECN brokers for better alternatives.

Advance Fee Scheme

Have you ever gotten an email with an opportunity to earn a significant return on your investment? All you have to do is make a small initial deposit before earning that massive return. Sounds pretty great, right? Except, chances are after you send the initial deposit, you never hear from them again.

These scammers often target those who lost in a risky investment. They present the scam as an opportunity to earn back their losses, which seems like a good idea at the time. If you receive this kind of offer and recently had a bad investment, consider it a red flag.

Offshore Investment Scams

You’ve likely heard of offshore accounts before as they tend to have a bad reputation for avoiding taxes. An offshore account is a bank account you hold in another country with the intent to lower your taxes or avoid them altogether. However, that usually doesn’t turn out well for the investor in the end.

Be wary of companies who deal with offshore accounts and promise to help lower your taxes. When it comes to investment trading, specifically forex trading, many platforms are linked to offshore companies (Hugosway being an example).

So, how can you spot an investment scam versus something worth your time and money? The majority of the scams out there do have red flags. Some, you may need to look more closely at.

Consider the offer first. If it’s a low-risk but high return kind of deal, that can be a red flag right there. Not many high return offers come with minimal risks.

Other warning signs include no licensing or regulations to sell the investment, they offer insider information, and pressure you into buying now. If you come across investments with warning signs like these, it’s best to report them.