Home > Financial Scams > High Risk Investment Scams

High Risk Investment Scams

By: Chris Nickson - Updated: 7 Nov 2012 | comments*Discuss
 
Fraud Investment Investment Scams Scams

Quite understandably, people want the highest possible return from their investments. But as a general rule, the higher the return, the greater the risk of the investment – you could gain a lot or lose everything. There are plenty of investment scams – frauds, really – that seem to offer investors a high return at very little risk, often in stocks or other areas, but all they really do is take your money.

How The Investment Scam Works

The investment tip could come as a recommendation from someone you vaguely know. It might also be in a spam e-mail (which should be a warning sign), since Internet fraud is very common. However it arrives, the promise is the same – for the investment of a fairly large sum of money, generally in the five-figure range, you can make a very high return with just a small amount of risk.

The scam is designed to appeal to the greed within people, the chance to make a lot of money quickly. It might be in the form of Bank Guarantees from a bank elsewhere in the world; in fact, the investment will always be offshore, meaning you can avoid paying UK tax on the amount – another incentive to invest in the scam.

It could also be a tip on a stock about to launch which is “guaranteed” to go through the roof. Inevitably, the language will be quite technical, but with an emphasis that stands out on the return on the investment.

Like other investors, you might be convinced, send off your cheque, and take comfort in the statements when they arrive each quarter. However, it’s all a fraud, a scam. The statements are pure fiction, and the money has vanished into the scammers’ bank accounts, as you’ll discover when you try to get to your money.

How To Avoid Being A High-Risk Investment Victim

The best way to avoid being a victim of this fraud is to simply not believe everything you read, especially if it originates online. Internet fraud is far more common than genuine Internet investment opportunity.

If, for some reason, you see merit in the scheme, investigate the investment. Do your homework thoroughly, finding out about the company behind it (if they don’t have a landline number or street address, walk away immediately, because it’s certainly a fraud). Exactly how does your investment earn its return, and what are the risks involved – they’ll certainly be bigger than the claims made to you.

Be cynical. Until proven otherwise, believe it’s an investment scam. Be certain it’s all legal, and check on your tax position regarding the investment. Always remember that there’s no such thing as a guaranteed high return on a high risk investment, and anyone who claims otherwise is almost certainly perpetrating fraud.

One sign of a scam is pressure to sign the necessary papers being given on you. Don’t give in to it! Have everything assessed by a financial professional, or someone who’s familiar with the field before you put pen to paper.

Ultimately, the odds are that anything that promises a lot for a little is a scam. Investment scams, especially those with Internet fraud, which offers a lot of anonymity. There’s never a shortage of greedy investors, many of whom are gullible enough to fall for the scam.

You might also like...
Share Your Story, Join the Discussion or Seek Advice..
Why not be the first to leave a comment for discussion, ask for advice or share your story...

If you'd like to ask a question one of our experts (workload permitting) or a helpful reader hopefully can help you... We also love comments and interesting stories

Title:
(never shown)
Firstname:
(never shown)
Surname:
(never shown)
Email:
(never shown)
Nickname:
(shown)
Comment:
Validate:
Enter word:
Latest Comments
  • Samh1979
    Re: Builder's Scams
    Don’t fall foul of Arren Safavi from Lancashire decking. He looks and acts all professional however once the deposit is paid that’s him doing a…
    22 April 2022
  • Dia
    Re: Sky TV Scam
    I just received a call from someone saying from Sky not sure if it was genuine. Asked me for my address. Then my bank details, then my password for my…
    2 April 2022
  • Pepper
    Re: Scams And Seniors
    Scammed out of £12500 by a builder who has been to court several times. I paid by my debit card, have I any chance of getting compensation. I am…
    9 September 2021
  • snobbs
    Re: Builder's Scams
    We have been scammed by James Hookey & Libby Hookey... advertised for a roofer on fb, Libby contacted me to say James can help... he came quoted,…
    6 July 2021
  • Villager
    Re: Sky TV Scam
    I received a call from ‘Sky’ this week saying I had overpaid and was due a refund. This seemed fairly plausible as the day before I had telephoned Sky…
    10 June 2021
  • Sam
    Re: Builder's Scams
    Don't use Martin Jacques from swift cavity clear or swift building services based in Manchester.He did a awful job of my garden and charged thousands.
    1 June 2021
  • John
    Re: Bank Identification or BIN numbers Scam
    Okay I just don’t want to euryeurueiieoeoe you talking about to sleep or sleep no sleep sleep no cap on sleep and…
    6 May 2021
  • Scallywaggle
    Re: Builder's Scams
    I have been scammed by a man called James hookey, and his wife Libby hookey, from face book, asking for recommendation, for patio, The wife sends a…
    5 April 2021
  • don’t know
    Re: Vishing Scam
    Had a text message this morning form a mobile number saying that I’ve missed a delivery and that I needed to pay 1.50 to R.M. Lucky enough my iPhone…
    17 March 2021
  • d.a.smith
    Re: Builder's Scams
    DNF Builder and Plastering, based in North East (Newcastle/Gateshead/South Shields/Sunderland), run by David (Mancunian) and Ian. ***Do not…
    28 February 2021