Beware of the Online Investment Scams

Last updated on 22 Dec, 2018 | 6 comments

investment scams

Investing money has been a very sensitive issue. If you discover offline, then find a number of resources to invest, but in the case of online investment, there are more chances of online investment scams. The internet is an amazing medium to find investment websites and resources, but are all of them legitimate? No. Because there’s a lack of rules concerning investments, and hence, the chances of scams and frauds are augmented.

Ponzi scheme online investment scams


You might have heard about the Ponzi scheme, which was a fraudulent investment scheme in 1919. Originated by Charles Ponzi, this scheme showcased attractive offers and claimed huge short-term returns, such as 50% in 45 days or 100% in 90 days. The returns sounded too unusual or abnormally high. But eventually, instead of investing, Ponzi redistributed the money and told investors that they made huge profits out of it. Big scam, isn’t it?

So it’s better to take some precautions before leaping into the investment field. Here are a few tips and advice on investment scams.

Think before getting trapped in online investment scams

1. Check company background

Would you prefer to invest without knowing the background of the company? Definitely no. While investing in any business, you need to make at least a standard inquiry about the company. Is the company legitimate? Or is it offering good or accurate returns? Moreover, you need to inquire about the character of the owner and their operations. In case you have trouble inquiring yourself, you can seek assistance from the industrial regulatory bodies such as FINRA (Financial Industry Regulatory Authority).

2. Apply common sense

For the online investment sites, one of the biggest mediums of capturing leads is email and text messages. Imagine you receive an email claiming you as a lucky winner of some contest and they are desperately offering you millions of dollars. Just think why would anyone offer you a million dollars absolutely for nothing? Scammers understand your greed and cater your need accordingly. They promise to deliver something free of cost and the internet is one of the greatest medium for them to implement this.

email scam messages

Example of an email scam

You must be aware of the Nigerian scam where the sender facilitates to send a huge sum of money with your help. They normally target people through emails and offers a commission in the form of a million dollars. This kind of online investment scam is prevalent since the 1990s and they also have a section of the Nigerian criminal code, Section 419.

3. Contact regulators

If the online investment companies show up in the Edgar database, then instantly execute a checkup with the state security regulators to see if any complaint is filed against the company. In case the company is publicized by a brokerage firm, then contact your state regulator and FINRA to confirm whether the brokerage firm has a good disciplinary track record or not.

4. Conduct research

For better safety, implement serious fundamental research yourself to analyze the reputation of the company. Obtain copies from the company’s financial statements and investigate them. Conduct research on the firm employees and company persons, about their past record. If the company claims to be the biggest supplier of beauty products, then call the store and investigate if their claim is correct. As much as you dig into the company data, you will find more accurate and factual details.

invest money online


5. Look for reviews

Since it is an online investment company, you should certainly look for customer reviews on the web. There might be positive as well as negative reviews depending on the customer’s experience with the online stock investing firms. Therefore, you need to judge and analyze how far the company is right and accurate in its claims.

6. Unlicensed sales agents

Investment scams keep enrolling sales representatives for executive fraudulent schemes. The sales agents manage to earn your trust with false claims and unearth the illegitimate investments. Beware of the representatives claiming huge returns on investments with zero risks. However professional they look or sound, be alert of their traps because the real frauds can easily manage to earn your trust.

fraud investment agents


7. Advanced pays

One of the biggest signs of an illegitimate investment firm is when they seek an advanced payment. You might be asked for an upfront payment for something that you will never receive. And that payment is the reward earned by the scammer.


You certainly seek to invest in obtaining a good return in the future. But in this process, most of you get trapped in this illegitimate investment schemes that factually does not exist. Therefore, it’s better to educate yourself to avoid such scams and prevent getting stuck in such a fraudulent business.


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