Investment scams and fraud can affect nearly every individual, regardless of investment experience and professional background. Knowing what the most common scams are and how to handle those will give you a chance to ensure the longevity and success of your investments. If you are already the victim of an investment scam, you have to familiarize yourself with the steps to undertake immediately after suffering the loss.
The Most Common Types of Investment Fraud:
Certain kinds of investment fraud are rather common. Recognizing the schemes can actually help you stay safe and undertake adequate actions against the scammers.
The high-return investment that is risk-free ranks high up among the commonly used fraud schemes. You may receive advice from a consultant to invest in inappropriate products or funds. Some consultants suggest high risk investments to people who are nearing their retirement.
Pyramids have been around for some time, as well. People are stimulated to invest large amounts of money and to get other individuals to join the pyramid. In the end, these participants in the scheme see no returns, although the products and services offered through the pyramid could be legitimate. The Ponzi scheme is a type of pyramid and in this instance; new investors provide the earnings of people who have been a part of the scheme for a longer period of time.
A final very common type of investment fraud is called ‘pump and dump.’ A small group of people buys stocks and starts advertising those to others and stimulating people to do the same. This leads to a very sharp increase in price. The initial group uses that significant increase to sell the stocks before the price goes down to its regular values.
The first step towards handling investment fraud includes reporting the situation to the right authorities. First, contact your bank, especially if you have provided the scammers with your credit card or bank account number.
The institution to contact in the case of investment scam is the Financial Services Authority (FSA). This independent authority is responsible for the regulation of financial services provided in the United Kingdom.
FSA has a website that provides extensive information and advice to the victims of investment fraud. The FSA helpline is another reliable source of information. Keep in mind that you should also inform the local police office because FSA has no law enforcement authority.
Forensic Accounting and Assistance:
Forensic accountants can provide assistance in the case of investment fraud, as well. Fraud investigation is a lengthy process during which the investigative accountants gather all the necessary evidence for you to undertake legal action or to assist the police investigation.
Additionally, forensic accountants will help you discontinue your participation in the scheme and prevent future losses that are possible, even after the scam is uncovered.
Forensic accountants will work with FSA and the police to reduce the risk of adverse publicity and to handle the entire situation in a very discrete manner.
Prevent Future Losses and Threats:
The fact that you have uncovered investment fraud does not mean that you are already safe. It is possible to continue losing money and to even receive threats from the scammers, warning you to refrain from undertaking any actions against them.
Scammers may continue contacting you, even after you have reported to the respective authorities. Do not let the threats to alter your life. Refuse to send money in an attempt to make them go away. Scammers will keep on harassing you if they sense your willingness to cooperate.
Make sure that you are accompanied by someone when you are out and work on home security measures. It may sound like giving in to paranoia but a little bit of extra-security has never hurt anyone.
Chance your bank account, credit and debit cards. Starting fresh is the best way to cut contact with the scammers and to prevent future losses.