There are various common business investment scams to be aware of. Investment schemes consist of the illegal sale of financial instruments. Usually, investment scams are characterized by offers of guaranteed returns, overly-consistent returns, and low/no risk opportunities. As an investor, you should know how to get rich quick without being scammed by anyone from a professional investment advisor to a trusted neighbor. Certainly, use scrutiny and collect as much data as possible before engaging in a new investment opportunity. Here are the most common business investment scams to look out for.
A common business investment scam to watch for are advance-fee loans. Typically, these loans are offered to desperate borrowers who have exhausted all financial approaches. These loans are organized and promised only after an “advance” fee payment. Usually, the loan promoter represents the funds as sourced through foreign investors or offshore institutions. More so, loans are generally for a large amount, anywhere from $5 million to $100 million. Also, it is offered with elongated repayment terms at unusually low interest rates. Of course, you can become scammed by the promoter taking your advance-fee without providing you with a loan. Certainly, watch out for advance-free loan business investment scams.
Another common business investment scam is a pyramid scheme. Pyramid schemes collect money from those at the bottom, also known as new investors, to pay those at top, or the initial investors. The main goal of this scheme is to bring in new members, not selling an advertised product. It starts with a colleague or friend inviting you to an “opportunity meeting”. When you show up to the meeting, you will be shown a well-rehearsed presentation that promises exciting opportunities to earn wealth and adventure. You will then have to pay a hefty fee for products, lessons and courses to start this “amazing” opportunity. Next, you will have to recruit others and earn profits from them even to start making a profit. Definitely, pyramid schemes are a common type of business investment scam.
Social Media Fraud
Of course, social media fraud is a common type of business investment scam. Social media platforms such as Facebook, Twitter and LinkedIn allow users to connect to each other easier. In fact, investment promoters use these platforms to find investors and to really make money online. However, it is an easy way for con artists to join and participate in these networks. As a result, the scammer can build credibility and gain the trust of potential investors. Using the victims’ online information, the con artist can take advantage of the targets and make a connection. If anyone asks you to participate in offshore operations for high return with no risk or barely any information, think twice before agreeing. Definitely watch out for social media fraud as a business investment scam.
Pump And Dump Scheme
Moreover, a popular business investment scam is the pump and dump scheme. This scam occurs when a fraudster glorifies the purchase of a publicly traded stock. This promotion is meant to drive up its price, or pump the market. Then, they will sell it into developed artificial market, where they dump their shares. As a result, they make a huge profit. Of course, once the promotion is finished, you will be left with a stock that costs way less than what you paid for. Definitely watch out for the pump and dump scheme when investing in the stock market.
Boiler Room Scam
Next, a boiler room scam is a common business investment scheme. This scam is usually developed by a group of people pretending to work in an office, or boiler room. They create realistic websites to convince you their operations are real. In fact, they may take it a step further and set up a toll-free number. Also, to seem more legit, they might find a respectable address to “home” their office. They will advertise a product, such as an industrial product, or service. By the time you realize it’s fake, your money will be gone. Certainly, make sure the sites and companies you are buying from are legitimate to avoid boiler room scams.
There are several common business investment scams to be aware of. First, watch out for advance-fee loans where a promoter will take your advance fee without giving you your loan. Secondly, watch out for pyramid schemes where you pay a lump sum and only make a profit by entrapping other individuals. Of course, you can easily be scammed on social media as con artists can access your personal information. Next, be cautious of boiler room scams by buying from online sites that are legitimate and reliable. Finally, beware of the pump and dump scheme where a scammer pumps up the market then sells the stock in the artificial market they made. These are the most common business investment scams to look out for.