Fraudsters often work methodically and over a long period of time to be able to deceive investors repeatedly. They come first with an offer for an investment, then additional offers, and finally they offer to help to save the situation.
It often starts with a phone call from someone offering a profitable investment. The offer can also come via a text message, email or social media.
The intention is to be able to deceive the investor, preferably more than once. One characteristic of investment fraud is the methodical and long-term approach that fraudsters use. They may contact you several times a day or slowly build up trust with fewer calls but maintaining contact over a period of several years instead. Victims of investment fraud have often first been called by a stranger who introduces themself as an investment advisor or specialist. The person calling says they work for a company in the financial sector that is described as serious and respectable and sometimes even has an address in the financial district of a well-known city.
The person calling is knowledge and can easily talk about their product. They know what they should say and promise to sound convincing. They have an answer to every question. Fraudsters are often stubborn, and some victims have reported that they received hundreds of phone calls over a period of only a few weeks and finally gave in and agreed to invest.
Unfortunately, something that sounds fantastic in the beginning may in fact be a fraud that ends with you losing everything you invested. The promise of becoming "a millionaire in a month" is the type of message that they use. Often, the fraudsters promise that the money can be withdrawn after a short period of time and with a guaranteed return.
The message the fraudsters want to share with you is that they are skilled at what they do and the product and the opportunity are unique. You may even be told that only a select group of people have given the opportunity to participate. The fraudster may claim that you can buy into the investment below market value or they have insider information about a pending product or a new pending stock exchange listing. As long as you appear interested, you are treated as a highly valued customer and may be transferred to more experienced advisers at a higher level.
The strategy is to mimic a true business transaction in all respects, from the company name – which can be similar to those of well-known companies – to attractively designed websites. The websites can have links to respected actors, such as Nasdaq, Bloomberg, Visa, Mastercard and Market Watch; anything to appear serious.
The fraudsters know what is trendy and which products have been in the media lately. For example, the number of frauds based on investing in popular shares, currencies, commodities and virtual currencies has increased in the past year.
One type of investment fraud that has increased the past year is related to offers of relatively small investments, which means the fraudsters can focus on a large target group. Victims have often seen an ad in social media and entered their contact details, which are then spread to a large number of fraudsters. The ads feature famous people who explain how quickly and easily they earned a lot of money from an investment. Often, the ad is about bitcoin, and the information is presented as secret and exclusive. The ads are on social media and websites, and sometimes they look like they have been published by a reputable daily newspaper. However, everything is a bluff, and the famous people are being taken advantage of to draw attention and create credibility.
If you have entered your contact details, someone will soon call you from one of the made-up companies to try to sell you an investment. Often, all you need to invest the first time is EUR or USD 250. You usually can then sign in to a website that looks professional. You can see what you have paid and what investments were made. Often, your investment does well initially. However, these numbers are not real but have been manipulated so it quickly appears like the investment is performing well to entice you to investment more.
This is followed up by many more phone calls encouraging you to invest more and more based on the manipulated figures.
The goal for the fraudster is to be able to perpetuate the fraud for as long as possible in order to try to convince you to invest more money. In some cases, the fraud started with small amounts and then grew to several million.
A common thread in this type of fraud is that the person carrying out the fraud is often not only knowledgeable but also skilled at manipulation and knows what to say to inspire confidence.
Watch out for requests to install software on your computer that makes it possible for someone to connect remotely. This could make it possible for the fraudster to access sensitive information. The next step could be that you will be asked to enter log-in codes for BankID or hand over log-in information. Sometimes the fraudster has not only taken the money but also applied for large unsecured loans.
Sometimes there are references to fake authorities or oversight organisations and their websites. These websites make it possible to confirm that a company exists or that you actually are listed as an owner of the security in which you invested. In reality, though, the websites are run by the fraudsters, and they are answering any questions.
They often use names that can be easily mistaken for real authorities or organisations.
During this stage, the fraudsters try to lure money from you via a supposed fee, frequently when you have decided that you do not want to invest any more.
Many victims have experienced that when they decide to withdraw their money they are accused of being afraid and no longer trusting their adviser. If they stand their ground, the value of the investment can suddenly drop to 0 or there are made-up fees that must be paid before the money can be withdrawn, such as bank fees, taxes, contract fees, etc.
Another setup is that someone calls and says that you have been assigned a new adviser or another agency will take over the business. This can come with an offer to sell or swap your shares at a beneficial price. This fraud is based on trying to lure money from you via supposed fees linked to the sale.
The offers are usually only valid for a short period of time and require a quick decision. Normally, there is an assertion that a tax must be paid in advance and that you will get help with all the administrative requirements. But if you pay the first fee, you can be sure that there will be additional fees.
If you have been the target of one investment fraud, there is a large risk that you will be the target of others. Sometimes they come right after the first fraud, but other times they come several years later. Eventually someone will be in contact to offer help to recoup losses from earlier frauds.
The person calling often claims to be knowledgeable about a previous fraud attempt and says that they are calling on behalf of an authority, bank or legal department. It has happened that the telephone screen incorrectly shows an authority's telephone number, for example FI's switchboard number. This is a continuation of a previous fraud.
The fraudster often wants to access your computer and asks that you install a program for remote connection. They present that argument that this will make it easier to show a presentation of what they have found. Or you need to show what transfers you made to the fake companies. If you agree, the person can gain access to both sensitive information on your computer and the money in your bank accounts.
Another variation is that you will have to pay some sort of fee for the help they are offering. This can be a contract fee, licensing fee, tax, bank fee, or some other fee that is part of the fraud. The setup is similar as that described earlier. Often, the fees need to be paid quickly, sometimes with the explanation that the money might not be available the next day and will therefore be lost.