Tips On How To Identify Internet Investment Scam

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Hi Friends,

There have been a buzz lately about internet scam in Malaysia. There were cases where students spent all their educational fund to invest in such “Get Rich Quick Scheme”.

Today I read from The Star website on how to identify between real websites offering genuine investment products from those that are fraudulent as advised by the Security Commission. Below are some of the features that you should look out for:

1. These websites may offer attractive investment schemes (claimed to give high return with low risk) and use “posh office addresses.”
2. Investment programmes which offer secret, private investment markets, and offer above-market rates of return with below-market rates of risk, for “privileged investors.”
3. Proprietors who claim to be “investment experts”, highlighting the “excellent track record” of the company with testimonials from “clients” to convince investors. The identity of the proprietor is usually not available for verification.
4. There is no reference to any licence for their activities of providing investment services and products. Some may claim that their activities do not require a licence.
5. Recommendations to buy/sell certain stocks and “advice/tips” are delivered to clients via e-mail, short messaging service (SMS), access to password-protected web page or one-to-one or group meetings.
6. The proprietors may also advertise their services through indiscriminate use of e-mail messages and messages posted on various bulletin boards and Internet discussion sites.
7. Websites are professionally designed to resemble a legitimate business and may be equipped with real-time stock prices, market commentary, market news and links to other financial websites.
8. Some of these websites may include free services, such as basic tutorial about the capital market, e-books and access to chat rooms/bulletin boards.
9. Most of the payments are transacted over the Internet or to an offshore account. Some investors only see their “virtual” profits but have to go through a long-winded process if they want to withdraw it.

The list above is not definitive. There are new methods coming up every day. Before you first invest in those schemes, make sure you carry out background check. Below might help you according to the Security Commission.

1. Check for licence: If you know the identity of the person giving the online investment advice, verify/check with the SC to see if the individual or company has been given a licence to give investment advice.
2. Giving investment advice, even on the Internet, to the public requires a licence from the SC. Without a licence, the person is in breach of the Securities Industry Act 1983. If you are unable to get the person’s identity, be very cautious because he could be a fraudster/conman out to get you.
3. Get the facts: Never make an investment decision based solely on unsolicited/uncalled for investment advice posted on the Internet. Always verify with credible information providers, such as the Bursa Malaysia website (www.bursamalaysia.com) or annual reports, prospectuses and the newspapers.
4. Do independent evaluation: Check information that you have obtained from chat rooms, online bulletin boards and websites by conducting your own evaluation on the investment opportunity. Refer to a licensed investment adviser or your remisier if you are unsure of how to do it yourself.
5. Just ignore them: Lastly, if you receive an unwanted investment advice or tips from the Internet that you can’t check on and you don’t know who is providing it, the best decision you can make is to ignore it totally.

Click here to read from the source.

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This entry was posted on Tuesday, April 24th, 2007 at 7:47 am and is filed under News update, General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.