Investment scams

While many types of scams share common features, investment scams are especially attractive to potential victims as they offer high returns on your money. These false promises of easy-to-win, risk-free returns gain the victim’s trust and can be extremely tempting.

Tricks used by investment scammers

Always be cautious when taking out an investment, scammers are very good at presenting themselves as knowledgeable and trustworthy, with professional-looking websites and carefully crafted arguments. Even expert investors may fall for their skilful schemes.

Some other common tricks include:

• Sense of urgency with limited windows to transfer the money. In reality, you should take as much time as you need before committing your hard-earned money to any investment.
• A skilful mix between insult and flattery, scammers may say ‘only fools, cowards or ignorant people would let the opportunity pass’.
• Consistent use of jargon. Scammers will use jargon to make you think they are experts and know what they are talking about. However, if they are not able to clearly explain the key features and risks of the investment so that you understand it, it is a red flag.
• The promise of very high returns with little or no risk.
• Building trust. Scammers may provide initial investment returns as promised. However, when after a couple of successful “trial investments” you give away more money, the scam is revealed.
• Requests for secrecy. Scammers often ask you not to tell friends and family about your investment.

Examples of financial scams

Scams keep evolving making it more difficult to spot the red flags. Some examples on the rise:

Protect yourself against investment scams

Prevention is the only proven way to protect yourself against investment scams: not giving the money in the first place. Once you give your money away, it is almost impossible to get it back. As soon as something feels wrong after sharing financial information or transferring money, call your bank. The longer your money is gone, the harder it will be to get it back.

There are some things you should check before taking out an investment:

1. Always check that the financial services firm or person contacting you is regulated by the Central Bank of Ireland. You can look for this on the central bank register. Even if the firm is on the register, you still need to check you are interacting with them and not a scammer pretending to be them.
2. Check if a warning has been issued about the firm you are dealing with. The Central Bank of Ireland regularly issues warning notices which publish the names of firms not authorised to provide investment advice. The Central Bank warns that there may be scams out there that have not yet come to their attention.
3. Never invest in something you don’t understand (this also applies to genuine investments). Do not invest your money unless the investment fully matches your investor profile, risk appetite, personal preferences and circumstances. Be clear about how much you can afford to lose in the worst-case scenario. Scammers always minimise or dismiss the risk. Learn more about investing.
4. Never invest all your money (this also applies to genuine investments). If someone encourages you to put all your savings in a low or no-risk investment, it’s a red flag.

It is OK to be rude if you feel pressured to make an investment decision. A legitimate provider will never rush you into giving your money. You may have started a conversation or acted on something that caught your attention on social media out of curiosity or interest, but as soon as you don’t feel comfortable with their demands, or have the slightest doubt, stop the conversation.

If you suspect fraud or a scam you should immediately contact your bank of financial services provider and the Gardai

For more information on common scams, how to protect yourself from financial scams and what to do if you have been a victim of a scam, read the Central Bank of Ireland’s guide on avoiding scams and unauthorised activity and the Garda Investment Fraud Advice.

Last updated on 3 May 2024