Scam Checklist

Every now and then, we are approached by a “long lost friend” or someone who claims to have found the secrets to riches, without the hardwork part.

Well, before you look further into the fine prints, you can help yourself and many other people by telling them to go through the following checklist which is provided by our very own Securities Industry Development Centre (SIDC):

MINIMISE the risk of losing your savings to scams by recognising the different types of illegal investment schemes that are plaguing our society. Here are some typical characteristics and promises made by scams:

# For every investment that you make, you will receive a high return, for instance, 20%-30% per month, every month.

# You are not shown the so-called quality product you are allegedly selling, but you will get paid for every person you recruit or sign up.

# You are told that the offer is for a limited time and that you MUST join or buy today.

# You are told to send money to some foreign banks in foreign currency to claim a prize but you do not remember entering into any contest or lucky draws.

# You receive unsolicited phone calls offering investment opportunities and you have no idea how the company has obtained your phone number.

# You receive unsolicited e-mails asking you for your bank account number because they want to send you money, usually millions of US dollars, from some foreign countries. This is, strictly speaking, not an investment scam, but is still a scam, and a popular one.

# You are offered an investment product that guarantees large profits with no financial risk.

# You are asked to invest in an investment scheme. The address and contact information of the investment company offering you big money is located in a foreign country where you cannot verify its physical location.

# You are offered a ??ree gift?? in order to get something later, for example, a larger amount of money.

# You are offered job opportunities with high pay without any need for relevant experience or academic qualifications.

# You are approached by someone who claims to be an agent for foreign trading houses (for example, based in Macau, Bahamas, British Virgin islands) to trade in foreign indices (for example, Hang Seng index), commodities (for example, coffee) or forex (for example US$, Yen) but you need to deposit some money as a ??argin?? in some foreign currency before a trade can be executed.

# It is hard to find any information about the company?? licence or physical existence in any regulator or authority?? website.

# You are required to remit money to a foreign country through telegraphic transfer or through any other mode for the investment.

The invitation to the above scams takes many forms. In addition to the unsolicited phone calls, the more ??referred?? mode is through the Internet. Potential victims are also lured to attend seminars or face-to-face meetings.

If you are faced with any of the above situation, what should you do to protect yourself?

Protection #1:
Avoid any investment that guarantees regular or large profits for a small outlay. Be extremely wary of companies that guarantee large profits or tout high performance over a short period of time. You must remember that every investment involves risks and you must have often heard, ??igh risk, high return!?? Be extra careful, especially if the investment is supposed to give you high returns with low or no risk.

Protection#2: Be wary of plans that focus on paying you to recruit others instead of paying you to sell products and services. Key words that should caution you are ??ownline?? or ??yramid??.

Protection#3: Never sign up for an opportunity in a high-pressured situation, such as ??ou have a limited time to join this scheme?? or ??uy now or miss out??. Remember, if it is a legitimate business, it will still be around tomorrow, next week, next month or next year.

Protection#4: Be sceptical about unsolicited phone calls about investments from offshore salespersons or companies with which you are unfamiliar. If the caller says that he or she is a broker?? dealer or investment adviser licensed by an authority abroad, ask for the name of the foreign regulator by which it is licensed and check the websites of the foreign regulator which would have a list of licensed or registered persons. You must always check the credentials of a licensed person with the relevant authority before parting with your money.

Protection#5: Be sure you get the company?? performance track record. Also ask for written information on the investment product and the business, as well as the risks involved in the investment. Read carefully the prospectus or annual report of the company before investing.

Do not provide any financial or personal information before you establish that the company is legitimate.

Protection#7: Always check against the regulator?? websites, for example, the Securities Commission?? website ( for information on investor alerts, or the list of licensed intermediary companies and so forth.

If in doubt, do not invest. Why should you risk your money if you cannot get solid information about the company, the salespersons/agents, or the investment?

Protection #9: Never remit your money through telegraphic transfer or through any other mode to any foreign jurisdiction without checking the investment?? legitimacy.

Yeah, it’s a rather long-winded list, but you will do well to heed them. You’ve been warned.

2007-03-18T17:48:03+00:00 March 18th, 2007|Malaysia Financial News|0 Comments

Leave A Comment