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How to avoid falling victim to an online financial scam | ABC News

One of the big trends in online fraud is the emer­gence of Fake Invest­ment Scams. Con­sumers are think they are deal­ing with major banks or invest­ment com­pa­nies but in real­i­ty they are being tricked into hand­ing over their life sav­ings to scam­mers.

In this sto­ry ABC News goes deep inside a scam to see exact­ly how one Mel­bourne man was tricked by scam­mers pos­ing as finan­cial advi­sors from JP Mor­gan. The real JP Mor­gan has noth­ing to do with it and didn’t even have any idea it was going on until much month after the scams had begun. The inside work­ings of these scam oper­a­tions are so clever it could hap­pen to anyone.nvestment scams lure you in with promis­es of teach­ing you how to make a lot of mon­ey quick­ly, eas­i­ly, and with low risk — usu­al­ly by invest­ing in the finan­cial or real estate mar­kets. Some­times start­ing with a free sem­i­nar, the scam­mers lat­er will charge you a hefty fee for their “proven” invest­ment tricks. But the real tricks are the lies they tell you.

Investment Coaching Scams

In an invest­ment coach­ing scam, the scam­mer will tell you that their “patent­ed,” “test­ed,” or “proven” strat­e­gy (or some­thing sim­i­lar) will teach you how to make mon­ey invest­ing in stocks, bonds, for­eign cur­ren­cy, or tax liens. They promise that their invest­ment approach will set you up for life — and even let you stop work­ing.

What to watch out for

They get your atten­tion with infomer­cials or online ads, encour­ag­ing you to attend free events or to watch free intro­duc­to­ry videos. But lat­er you find out that you have to pay a hefty fee to get the coach­ing they promise. They’ll show you suc­cess sto­ries of peo­ple who have used their coach­ing pro­gram. But you have no way of con­firm­ing that their sto­ries are true.

What to know

The truth is that the pro­mot­ers of invest­ment coach­ing scams exag­ger­ate the mon­ey you can make with their sys­tem. They also fail to give you the step-by-step guide they promise, and lie about oth­er people’s suc­cess. It’s all part of a mar­ket­ing scheme to get you to pay thou­sands of dol­lars for what turns out to be emp­ty promis­es.

Real Estate Investment Seminar Scams

In-per­son and online sem­i­nars about how to invest in real estate often pro­mote “risk-free” train­ing or busi­ness coach­ing sys­tems.  They may lure you in with big promis­es or guar­an­tees of finan­cial free­dom, say­ing they’ll teach you how to make lots of mon­ey. But many real estate invest­ment sem­i­nars are scams.

What to watch out for

The pro­mo­tion­al mate­ri­als and sales pitch­es used for real estate invest­ment sem­i­nars often make over-the-top claims:

  • Scam­mers say you can earn big mon­ey fast, regard­less of your expe­ri­ence or train­ing. But that’s not true.
  • Scam­mers promise their deal is a “sure thing” that will give you secu­ri­ty for years to come. It won’t.
  • Scam­mers say you’ll rake in mon­ey by work­ing part-time or at home. But most peo­ple don’t.
  • Scam­mers promise you’ll be coached to suc­cess each step of the way. But there’s often lit­tle coach­ing, and no suc­cess.
  • Scam­mers claim the pro­gram worked for oth­er par­tic­i­pants — includ­ing the orga­niz­ers. And it might have, for a few peo­ple, but most peo­ple nev­er make their invest­ment back.

Don’t be con­vinced by ads with suc­cess sto­ries of peo­ple say­ing how much mon­ey they made with lit­tle time, effort, and risk. Or ads that fea­ture celebri­ties prais­ing the pro­gram. Those kinds of claims aren’t reli­able and don’t mean the pro­gram works. Real estate invest­ment scams often use fake tes­ti­mo­ni­als and pay peo­ple to endorse their pro­grams.

What to know

For most peo­ple who invest in these real estate invest­ment sem­i­nars — some of which cost thou­sands of dol­lars to buy into — the pay-off doesn’t match the promise. In fact, most peo­ple nev­er get back the mon­ey they invest­ed.

How to Avoid Investment Scams

If you’re con­sid­er­ing pay­ing for a pro­gram that promis­es to help you invest your mon­ey, stop and con­sid­er these things first:

  • Sta­tis­tics and tes­ti­mo­ni­als can be faked. Scam­mers want you to believe their pro­gram is always suc­cess­ful. They might show reviews or tes­ti­mo­ni­als by peo­ple who’ve used their pro­gram and made lots of mon­ey. But those could be paid actors or made-up reviews. You have no way of con­firm­ing their sto­ries.
  • Scam­mers exag­ger­ate the sig­nif­i­cance of cur­rent events. Scam­mers fol­low the head­lines and use cur­rent events to make their invest­ment oppor­tu­ni­ty seem excit­ing, inno­v­a­tive, and time­ly. They want you to feel pres­sured to com­mit now with­out hav­ing ful­ly researched the offer.
  • No one can guar­an­tee a spe­cif­ic amount of return on an invest­ment. Scam­mers might claim that you can make thou­sands of dol­lars per day or per month for life. But they don’t tell you the risks. No one can guar­an­tee that an invest­ment will be suc­cess­ful. And if you ask ques­tions about the invest­ment, they might give you vague answers and focus only on how much mon­ey you’ll sup­pos­ed­ly make.

See the U.S. Secu­ri­ties and Exchange Com­mis­sion (SEC)‘s investor alert for more tips.

Read more on ABC News: https://www.abc.net.au/news/2021–06‑2…

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