Red flags: How to recognise an investment scam

Given the rise of fraudulent schemes targeting unsuspecting individuals seeking to grow their wealth, and a series of high-profile fraud cases surfacing in recent months, Faizil Jakoet warns investors to be vigilant, sharing some red flags to look out for.

Consumers have been hard hit financially over the last few years, with interest rate hikes, fuel price increases as well as the general cost of living being more expensive than in the recent past. This trying environment makes for fertile hunting ground for crafty criminals, and the fact that technology has made instant investing even more accessible has widened their net.

Last year, South Africa was rocked by the United African Stokvel scandal which is currently under investigation by the Financial Sector Conduct Authority (FSCA) for defrauding over 600 investors – many of whom lost their retirement savings, homes and discretionary savings. Victims have said that the company appeared legitimate, given advertisements on reputable sites and endorsements by well-known brands.

This is a sad story in that so many victims were lured by what appeared to be a slick operation. However, there were signs that trouble was on the horizon, such as the fact that the scheme was not registered with the FSCA. In addition, investors were promised they could triple their money within six months – a typical feature of an investment scam, as legitimate investments cannot make guarantees about returns.

Read full article on: https://www.allangray.co.za/latest-insights/fraud-prevention-cybersecurity/red-flags-how-to-recognise-an-investment-scam/

May 20 2024 By Faizil Jakoet - Allan Gray