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Why investment scams are on the rise and how you can protect yourself
Investment scam victims in the first half of 2024 lost an average of $40,080 per case, police say
In the first half of 2024, reported cases of investment scams more than doubled to 3,330 from 1,577 in the same period last year, police figures show.
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Kareyst Lin, Content STudio
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Your phone pings. You’re added to a lively WhatsApp chat group promoting an investment that promises high returns at almost no risk. Other members flaunt their impressive “profits”, urging you to join in.
To some, these might be glaring red flags. Yet, many are still falling for the trap.
Singapore Police Force (SPF) figures show a sharp rise in investment scams. In the first half of 2024, reported cases more than doubled to 3,330 from 1,577 in the same period last year.
These scams are costly, with victims losing an average of $40,080 per case. Only government officials impersonation scams cause higher losses, at about $116,534 per case.
Why are more people falling prey to investment scams, and why are the losses so high?
Police Superintendent Rosie Ann McIntyre, assistant director of the Scam Public Education Office Operations Department, points to the complex scam methods used.
“Investment scams, especially the befriending variant, typically involve deception and social engineering conducted over a period of time (to build trust),” she explains. As a result, victims tend to “make multiple transactions and (end up losing) substantial amounts of money”.
More on how to protect yourself
- Friend or fraudster: When you receive unusual requests from a “friend” via text message or phone call, beware. Verify their identity first. More on how fake friend call scams work.
- Guard your chat space: Frustrated at unsolicited messages from strangers on WhatsApp or Telegram? Here are the safety features you can activate on the platforms.
The police identify three common investment scam variants in Singapore:
- Chat groups on messaging platforms: Victims are added to chat groups or channels on communication platforms such as Telegram, Facebook and WhatsApp, where a “lucrative investment opportunity” is promoted. To make the scam seem legitimate, other members in the chat group – who are also scammers – share fake screenshots of their profits.
- Befriending or pig butchering: Scammers contact victims through social media, communication platforms or dating applications (like Coffee Meets Bagel). They build trust before introducing fake investments. Victims often receive initial returns, leading them to believe the investment is real. The scam is revealed when they cannot withdraw their “profits” despite paying increasingly large sums of “admin fees”. Scammers would also become uncontactable.
- Online advertisements: Victims come across “investment opportunities” in Facebook ads or articles while browsing online. These articles and ads typically use attention-grabbing headlines (such as the “arrest” or “release of secret information”), and feature local celebrities or political figures recommending the “investment opportunities”.
So how can you protect yourself? “Do all necessary checks before dealing with any person offering financial products and services,” advises a Monetary Authority of Singapore (MAS) spokesperson.
MAS encourages investors to deal only with regulated persons and entities, as this affords them protection under its rules.
“Ask about the entity, including its track record and background of the people running the operation, and make it a point to meet with the representatives,” the spokesperson adds.
Investors can check MAS’ Financial Institutions Directory (eservices.mas.gov.sg/fid) for an exhaustive list of MAS-regulated entities and the activities they are authorised to provide.
“If you trade in unregulated products, MAS is unable to help you if you face difficulties in recovering your assets, or (experience) unfair or manipulative practices,” says the spokesperson.
Red flags
Some warning signs of investment scams, as highlighted by national financial education programme MoneySense:
- High returns at low or no risk
The “investment opportunity” claims to guarantee or protect your capital while promising high returns.
- Pressure tactics
Using limited offers, timed gifts or rebates to rush you into committing your money.
- Offer of commissions
Investment scams use commissions to encourage existing customers to bring in their friends and quickly enlarge the pool of potential victims.
- Fictitious track records
Investment scams may use testimonials from “satisfied customers”, claim to have years of experience, multiple accolades or large investment profits to gain trust.
This is part of a series titled “Act against scams”, in partnership with the Singapore Police Force.
