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Organizations or companies, whether small or large, dreaming of increasing their income or making investments, turn to professional financial consultants. They help select the appropriate investment market depending on the amount to be invested.
There have been frequent cases where non-professional financiers pose as consultants, mostly fraudsters who have studied such issues on internet pages. Their recommendations are dangerous and deceptive, and such fake experts may recommend fraudulent schemes, such as:
- financial pyramids;
- fake investment platforms;
- phony charitable funds;
- Ponzi schemes.
Fraudster Financial Consultants
The main rule of fraudster-consultants is to gain the victim's trust. Fraudsters do everything to establish contact.
Several signs indicate fraud:
- the proposed investment application will be too tempting to be true;
- the fraudster-consultant promises minimal risks and high returns in a short time;
- claims to have insider information with exclusive data, providing false reviews or reports;
- the investment proposal may be inconsistent and vague, in which case the fraudster does not provide complete information about the nature of the activity, the real value of investments, and associated risks;
- during the transaction, details or investment conditions may unexpectedly change without discussing the reasons.
Fake Experts
Fake experts, while talking about a profitable investment proposal, use a lot of complex professional phrases, employing technical jargon to impress potential victims, showing that they are professionals with many ideas and effective and promising investment opportunities.
Fraudsters try to confuse the victim so that they believe the information disclosed to them. Fraudsters do everything to avoid presenting any documents, drafting written contracts, signing statements, providing receipts. Although they prepare and fabricate fake documents to deceive investors.
A common method of social connection fraud, such scams target friendly or social relationships. In this situation, the fraudster may be an acquaintance from social groups, organizations, or clubs. Using friendly relationships or connections, the fraudster tries to gain the victim's trust and convinces them to invest in dubious projects. In such cases, the fraudster is trusted, confident that an acquaintance cannot deceive them.
Investment Fraud
To lure the victim and get their money, fraudsters use psychological methods and social engineering:
- an unexpected proposal to increase profits through investment from a little-known person;
- high-return promises with guarantees and no risks;
- apply pressure tactics on the victim for immediate decision-making about investment;
- talk about complex strategies and investment plans with very attractive prospects;
- no clear information about investment terms, income generation, and risks, lack of transparency in relationships;
- does not respond to requests for compliance with necessary norms and requirements when concluding a deal, rejecting all questions about the procedures necessary to meet requirements.
Fake Advice
Fraudsters exploit people's trust and gullibility, talking about profitable investment projects. The victim of their charm can be anyone with a high IQ level, education, and financial literacy.
Talking about quite profitable projects, fraudsters may push the victim to make a deal, while the victim will think they made such a decision independently to extract more investments. Meanwhile, giving fake advice, they offer the best company for investment, recommend the amount to invest, and talk about rosy prospects.
Basically, fraudsters use psychological pressure on the victim, convincing them with overly optimistic income promises, and can prepare thoroughly:
- creating fake investment company or charitable fund websites;
- showing happy investors who managed to earn from it;
- not allowing the person to come to their senses, bombarding them with information, forcing them to invest without carefully considering dubious proposals.