Investment scams
What you need to know about investment scams
Investment scams promise high returns with little risk, using urgency, fake endorsements and secrecy to lure victims and make their offers seem legitimate. They often appear through online ads, social media or fake celebrity promotions. Always check if a firm is regulated on the Central Bank of Ireland register and never invest in something you don’t understand.
If you suspect a scam, contact your bank and report it to the Gardaí. Check for warnings about unauthorised firms on the Central Bank warnings and read the Central Bank Guide on avoiding scams. For tips on safe investing, visit our page on investing and to go the Garda Investment fraud advice page.
What are the red flags to watch out for?
Scammers are skilled at appearing knowledgeable and trustworthy, with professional-looking websites and a carefully crafted proposal. Here are some common tactics:
- Promise of very high returns with little or no risk. If it sounds too good to be true, it usually is
- Creating a sense of urgency with limited time to transfer the money. You should take as much time as you need before committing your hard-earned money to any investment
- Mix of insult and flattery. Comments like “only fools would miss this opportunity.”
- Consistent use of jargon. Using complex terms to sound like experts but unable to explain things clearly. 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
- Building trust. Scammers may provide initial investment returns as promised. However, after a couple of successful ‘trial investments’ and you give them more money, the scam is revealed
- Requests for secrecy. Telling you not to discuss the investment with others
What are some examples of financial scams?
Scams keep evolving, but some common examples include:
- ‘Pump and dump’ scams: Scammers use fake social media ads to lure victims to join an investment WhatsApp group. Posing as a financial investment expert, the scammer then spreads misleading information to members about a particular company or stock.
- Celebrity endorsement/impersonation: Scammers create fake news articles and deepfake videos of celebrities convincingly explaining the amazing returns and endorsing the investment. The fake endorsements claim that online trading platforms use artificial intelligence or other new technologies, such as quantum computing, to make high returns on the investment. Of course, these claims are false, and the online trading platforms are not regulated or licensed by any authority.
Romance investment scams: The “romance” side of the scams starts through a dating app, website or social media, including the usual “love bombing.” Once the victims believe they are in a relationship, scammers suggest investing in a product – usually crypto assets – encouraging you to give increasing amounts of money.
How can you protect yourself against investment scams?
Once you give your money away, it’s almost impossible to get it back. Here’s how to protect yourself:
- Don’t be rushed – a legitimate business will never pressure you to decide on the spot.
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 of Ireland 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.
Talk it over with trusted friends, family or a registered financial adviser.
Check for warnings about unauthorised firms. The Central Bank of Ireland regularly publishes warnings with the names of firms not authorised to provide investment advice
Never invest in something you don’t understand or that doesn’t match your investor profile, risk appetite, personal preferences and circumstances. Be clear about how much you can afford to lose in the worst-case scenario. Learn more about investing.
Never invest all your money in one place, even if it seems safe. If someone encourages you to put all your savings in a low or no-risk investment, it’s a red flag.
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.
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 or financial services provider and the Gardaí.
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.
