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An investment scheme that promises quick and easy returns? It’s likely a scam
Investment scams were among the top five scam types last year, with 4,030 reported cases, notes the police
To protect yourself against investment scams, a good rule of thumb is to always verify if the entity is regulated using resources on the Monetary Authority of Singapore’s website.
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Kareyst Lin, Content STudio
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Get-rich-quick investment offers flood his messaging applications relentlessly. Earn 20 per cent returns in just a month – at low to no risk, they claim.
Receive lucrative commissions when you refer a friend.
But to savvy software engineer Norman Lim, these unsolicited messages are clear red flags.
Almost twice a week, the 31-year-old gets added to new Whatsapp or Telegram chat groups promoting “investment opportunities”.
“If it’s really so lucrative, why would they want to share the secret with everyone else?” says the seasoned investor, who has been involved in the financial markets since he was 18.
Other warning signs of investment scams, highlighted by national financial education programme MoneySense, include: Pressure tactics like limited offers, timed gifts or rebates; and fictitious track records such as many years of experience, multiple accolades or large investment profits.
Mr Lim is well qualified to be sceptical. As an economics graduate, he follows a few key principles when navigating the financial market.
For example, Mr Lim strongly believes in investing consistently instead of trying to “beat the market”.
“I would never buy into get-rich-quick schemes, because it goes against what I understand on how investments work.”
He invests up to 20 per cent of his salary each month with the goal of retiring in his 50s. All his investments are handled by a bank broker. Mr Lim’s main portfolio: Singapore real estate investment trusts (Reits), which he deems as “fairly low risk”.
Stay alert to stay safe
But for some, these red flags aren’t so clear.
Why do people fall prey? “Scammers deploy a combination of social influence techniques that prey on human vulnerabilities in their communications to deceive potential victims,” says Mr Jeffrey Chin, deputy director of the Scam Public Education Office, Operations Department, Singapore Police Force (SPF).
In 2023, investment scams ranked among the top five scam types with 4,030 reported cases, notes the police. On average, each victim lost about $50,700.
The three main contact methods for investment scams are:
- Befriending, where scammers make first contact with victims over social media and build rapport before introducing fake “investment opportunities”;
- Online advertisements, where victims encounter fake “investment opportunities” through social media advertisements; and
- Messaging channels, where victims are introduced to fake “investment opportunities” after being added to chat groups.
More ways to act against scams
- Verify before you buy: How do you know if the online marketplace seller is legitimate? A simple way is to check his verification status by the platform. Here are other safety features on e-commerce marketplaces you should take note of.
- Lock your funds: You trust yourself, but can you trust your device? Using malware, scammers can obtain sensitive details from your phone, and even access your bank account. Here’s a way to better safeguard your funds.
- Check before you trust: If you receive a call from a supposed government official, asking for money over the phone, what should you do? Hang up. Over $90 million was lost last year to scammers posing as government officials.
How can investors safeguard themselves? A Monetary Authority of Singapore (MAS) spokesman encourages investors to check if the entity is regulated by MAS.
Such information can be found on MAS’ Financial Institutions Directory (eservices.mas.gov.sg/fid), Register of Representatives (eservices.mas.gov.sg/rr) and Investor Alert List (mas.gov.sg/investor-alert-list).
“Dealing with an unregulated entity means giving up safeguards offered under the laws administered by MAS,” the spokesman adds.
This is part of a series titled "Act against scams", in partnership with the Singapore Police Force.
