Protect yourself from online investment fraud
Published on 19 September 2022
You have received a call from an unknown number and the person on the other side of the line offered you a unique investment opportunity with a large return? You have clicked on a tempting ad describing how your fellow citizens made a fortune by investing only 250 euros and inviting you to do the same? Unfortunately, the situations described are not the first step in smart investment, but usually the beginning of sophisticated investment fraud, whose victims are growing in Croatia.
The Internet is a place that has offered cybercriminals many opportunities for fraud for years. As Internet users became increasingly aware of various forms of cyber fraud, criminal tactics became more smooth. Fraudulent organisers in the virtual world are hard to detect because they can be situated in any part of the world, and in practice this means that as soon as one criminal scheme fails or encounters a reduced interest of users, criminals already start to prepare another, even more effective one.
Smart investment or sophisticated investment fraud?
Recently, so-called investment fraud has been on the rise across Europe and Croatia, aiming to extract as much money as possible from victims who are promised high returns for a small stake. These are usually offers for profitable investments in stocks, bonds, cryptocurrencies, resources, gold or land. It is difficult to determine who is behind such schemes, but mostly they are foreign companies that do not have a license to provide investment/brokerage services in the territory of the Republic of Croatia or even, more often, are completely false! Some common examples lately have been calls from representatives of GlobalCG, Ford Beckett or soltechx.com, so if you receive their call, be extremely careful, it may be a scam!
Fraud is most often carried out in several stages: enticing the victim, ensuring the initial stake, falsely representing the growth of the investment via fake websites, demanding additional investment, refusing payment and offering the return of lost money, but with prior payment of a commission.
In reality, the money paid by the victim was immediately transferred to various banks around the world and, through a complex money laundering network, paid into the accounts of companies owned by criminal groups.
In practice, an Internet user clicks one of the paid ads on social media or web portals that show “How I got rich” testimonials and often illegally use images and false statements from celebrities in order to lure victims. The advertisement leads the prospective investor to a false website of an alleged investment firm with a request for entering personal data (name, address, mobile number, etc.). The personal data entered are then forwarded to call centres of criminal groups, from where their members make a telephone call to the user presenting themselves as agents or brokers, and during the call they present a (false) investment opportunity and encourage the person to make an initial investment of 250 euros.
During the conversation, the “agents” often share details and expert expressions that may sound credible and use friendly tone to gain the victim's trust. Once the initial deposit is paid by the victim, they are given access to a fake website and a personal account through which they can monitor the continued growth of their investments. It is important to note here that the design of these sites increasingly looks sophisticated, i.e. resembles the websites of real investment firms, and includes fabricated “evidence” of legitimacy, certificates, licenses or users’ success stories. The victim can most often see in a very short time that their investment has grown from 250 euros to, for example, 50,000 euros, after which the “agent” asks the victim to invest further to ensure an even greater return. The victim then has two options – to continue making payments or to demand the withdrawal of “earned” funds, which of course will not be possible.
When the victim requests payment, the “agent” will start to delay and give various explanations such as: “Now is not the right time to withdraw”, “Your funds have been frozen until further notice”, etc. After the victim starts insisting on the payment or suspecting fraud, criminals can start the final phase of fraud by promising to pay the money, but after a small payment by the victim for “commission”, “bank charges”, “tax”, and so forth. In some cases, criminals threaten with lawsuits and similar extortions and often intimidate the victim to get extra money. When they get enough money or when the story spreads too widely and becomes ineffective, such fake websites are usually deleted and disappear forever.
Being informed and educated as the most effective protection
Financial fraud has been present for decades, and we may think that a sufficient number of people are already familiar with it and know how to spot it and how not to become a victim of such criminal endeavours. Sadly, this is not the case. No matter how long it has been present, financial fraud continues to bring huge profits to criminals. Victims are deprived of financial resources, and often of moral or legal satisfaction as well, because such criminal networks are difficult to completely destroy.
Some warning signs that immediately expose financial fraud are social media and web portal ads, which (without permission) use images and false statements by celebrities on the subject of getting rich quickly. For example, you can often see ads in which famous Croatians such as athletes, musicians or entrepreneurs describe how they have made a large amount of money and invite you to click and join. Clearly, these are false testimonials, which you must not fall for. Refrain from communicating with such sites, do not share your personal information, and do not deposit money into their accounts.
Although their design may give the impression of a legitimate website, fake websites may also have several warning signs. You should be suspicious when pop-ups appear that require personal and bank information, as well as emphasizing urgency. If you have ended up on one of such sites, do not leave your personal data, turn off the page and delete cookies for that website in your browsing history.
If you receive a call from an unknown number and the person on the other side of the line offers you a secure investment with a high profit for a small stake, do not join in the conversation, hang up immediately and block the number. Don't believe grandiose declarations and remember: if the offer sounds too good to be true, then it probably isn't true. Banks and legitimate financial institutions will never ask you for personal or bank information via telephone or e-mail.
If you decide to continue the conversation, ask the person you are talking to how they obtained your phone number and the exact name of the brokerage firm whose services are offered to you, and then check Hanfa registers to see if such a company exists and is allowed to provide services in Croatia. All investment firms must be listed in Hanfa’s register, regardless of whether they are domestic companies or foreign companies that meet the conditions to provide services in Croatia. If the company is not in listed in the register, do not enter into a business relationship with it and pay particular attention to companies from so-called third countries (any non-EU country) which have their registered office in exotic islands such as Saint Vincent and the Grenadines, Vanuatu, the Marshall Islands and others. Such areas are known for weaker regulation and frequent fraud.
In addition to all of the above, it does not harm to repeat the basics of Internet security – use antivirus programs, shop online only on verified sites, do not share personal data on social networks, remember, and do not write down and disclose your bank card PIN and other passwords, and get informed and seek professional and verified financial advice before starting any investment. Victims of financial fraud should be especially careful because once you have been a victim of it and paid money, it is likely that criminals will target you again or sell your personal information to other fraudsters. Ultimately, if you suspect that you are the victim of investment fraud or if you have shared your personal and bank details with someone you suspect is part of the scam, contact your bank immediately and report the fraud to the police.
To learn more about what to pay attention to before making an investment decision, please consult Hanfa's educative brochure offering advice on how to protect yourself from online financial fraud.
