Spot investment scams; Stop investment scams

Investment-related Scams 

News of investment scams and frauds appear in the media from time to time, where promises of quick and lucrative profits are often used to lure unknowing individuals into traps set up by scammers.

Nonetheless, there are quite a few telling signs that investors should pay extra attention to before rushing into investments that claim to provide high returns or risk becoming the next victim of scam. Be sceptical if investment opportunities come with any of the following features:

• Guaranteed high returns
• Sure-make-money investments
• Low or no risks

While investment scams come in various forms and set-ups, investors should be particularly alert to these types of scams and tactics that were recently reported:

• When approached by strangers on social media platforms, or received unsolicited messages on phone, text (via Whatsapp, Wechat etc., or email) or through any other digital forms, caution should be exercised when befriending such strangers, or to provide any personal detials;
• Discretion should be taken when stock or investment tips are given by persons befriended online, and investment transactions should not be made unless you have carried out your own due diligence on the companies/shares.
• There are scams or frauds that do not require you to send monies overseas or to transfer them into an actual bank account. Even if you are trading in stocks or products listed on reputable exchanges, investors should still conduct proper due diligence and to avoid complacency.
• Don’t think that the first few ‘stock tips’ were profitable so the callers or persons you befriended are therefore trustworthy, as this may be part of their strategy of winning you over.
• If an investment product promises high returns, they should also come with high risks. Investors should never believe claims of a guaranteed investment or trading strategy and succumb to promises of guaranteed returns.
• Investments should be carried out responsibly and within your own means.

One way for investors to identify if an investment opportunity is genuine or dubious, is to keep an eye on advisories from the Singapore Police Force.

For example, in May 2019, the SPF issued an advisory advising the public, that the Commercial Affairs Department (“CAD”) had received complaints relating to suspected “pump and dump” scams involving companies listed on the Hong Kong Stock Exchange: 

A “pump and dump” scam is a form of stock market manipulation where fraudsters artificially inflate the price of a share (“pumping”), before selling their own shares once the price goes up (“dumping”). The fraudsters “pump” up the share price using a variety of methods, including spreading favourable but fake news about the company or creating false impression of trading activity in order to induce victims to trade in the company’s shares. 

Victims were typically approached by scammers claiming to be from China or Hong Kong on social media platforms such as WeChat or LinkedIn. These scammers would then patiently work their way to gain the victims’ trust by texting them frequently on the pretext of friendship or networking purposes. Once trust had been established, the scammers would share that they possessed insider information on certain companies listed on the Hong Kong Stock Exchange. They would then encourage victims to buy these shares on the promise of quick and guaranteed profits.

Soon after the victims had bought their shares, the share prices of these companies would plunge sharply and the victims incur huge financial losses¹. 

Fraudulent & Impersonation Scams 

a) Never disclose your internet/mobile banking or credit card details such as bank account user ID, passwords, Personal Identification Numbers (PINs) or One-Time Passwords (OTPs) to anyone through phone, email or SMS/messaging applications.

b) Do not authorise any suspicious authentication request. For example, do not respond to digital token authentication or OTP requests via phone calls if you did not initiate any internet/mobile banking transaction.

c) Be suspicious of unsolicited messages or calls purporting to be from MAS or banks².