5 Most Common Investment Scams and tips on how to avoid them

The risks of fraud in various types of investments are a reality, which unfortunately brings with it a large number of deceived victims. Sometimes things are visible from the beginning, so more damage can be prevented, but sometimes people do not realize that someone is playing them until it is really too late.

Fraudsters exist all around us. They try to get their potential victims to take risky actions, sign some guarantees and contracts, take out loans, and get stuck in debt.

Unfortunately, there are naive people who believe such stories. Many of those MLM schemes have proven to be scams, and many people have been drawn into them, losing large sums of money.

The same thing happens with investments when people are persuaded to take risky actions so that the one above them can use a certain benefit.

Investments and their challenges

Nowadays, everyone is talking about some kind of investment. People buy stocks, trade them, invest in cryptocurrencies, and the goal is to make some profit.
The methods are becoming more sophisticated, in the interest of the investor. However, what we forget to anticipate is that scams are becoming equally sophisticated.
That is why it is becoming increasingly difficult to protect ourselves from fraud.

However, we can learn to recognize them and give up in time if something seems too suspicious and we fear that we may lose our money.

If you become a victim of a scam, you can reconcile your fate or seek legal advice from companies like mdf-law.com so you can get your lost money back and punish the scammer.
In terms of fraud, these are the most common in the world of investment and trading:

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1. Unexpected and too good offers

Source: pexels.com

If you get a message, a call, or an email with an unexpected offer that sounds too good to be true, ask yourself why you were chosen. True, no one is so special as to get the ideal lucrative offer. You have simply become easy prey for some reason.

They will claim to have found your contact through friends, brochures, advertisements, but none of this will make sense to you. Many victims ignored the illogicality of the good offer and were deceived.

So, if you get an unexpected call, and he insists on doing something and puts pressure on you, do not do it. And of course, do not give them remote access to your device. Never do that, even if you know the other person.

2. Ponzi schemes

Source: pymnts.com

Ponzi is also known as a pyramid scheme or multilevel marketing. This means that there is a hierarchy. That is someone who is at a higher level than you is forcing you to recruit new investors in order to make a profit. It goes really hard and what happens in the end?

You stay at the bottom of the pyramid and have no chance of progressing while someone earns money on your back.
To avoid this scam, you need to give up as soon as you realize it is a Ponzi.

3. Advance fee schemes

Source: ai-cio.com

In such schemes, the victim is forced to give money to someone who will help him increase his return. But the scammer disappears, deletes the online profiles, and turns off the phone.
The most common targets are people who invest in risky investments or who have just lost a certain amount of money. The fraudsters contact them promising to help them recover the loss, but they have to pay for that service in advance.

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But what they do not realize in such moments of despair is that someone is playing with their emotional state. In the end, they are left without the money they gave for the alleged help.

4. Cryptocurrency fraud

Source: pexels.com

Cryptocurrencies are interesting to many people. Their daily presence makes them very attractive for investment. However, many do not understand the concept, and thus become an easy target for fraudsters.

If you want to be part of the crypto market, be prepared to learn a lot so that you can fully understand it. If someone approaches you and asks you to trade on your behalf, use your cards and promise you a profit – that person has no sincere intentions.

If someone asks you to send them Bitcoin or another currency, promising to double your investment, do not do so. Many fraudsters take advantage of the fact that knowledge on the subject is limited, so novice investors become easy prey. Be especially careful with offers from people who happen to find you and whom you do not know.

5. Fraud with life insurance or pension funds

Source: news24.com

These scammers target people who already have some life insurance or pay regularly into a state pension fund. They access personal data in a criminal way and allegedly offer them better conditions.

What they forget (deliberately) to say is that the victim has to pay additional costs. In this way, they are involved in a big scam and lose the funds in which they save and invest from their youth.

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Most often, younger family members are the ones who notice that someone is a victim of fraud. Unfortunately, a lot of money is already lost in such schemes due to naivety and lack of information.

The deceived say the problem only after they can no longer pay enough money, as much as is required of them.


When something sounds too good to be true, it is likely to be fraudulent. Do not be fooled by false investment stories. Sometimes promises look really good, which even hinders common sense and reasoning.

If you think you are a potential victim of fraud, stop risky activities. What is real and trustworthy is often not as attractive as scams sound. It can happen to anyone, but it is best to prevent this by using only investments that are relevant and realistic.

If you know who the fraudster is, do not hesitate to report him or ask for legal aid. That way you prevent someone else from being an even bigger victim of their deception.