The 6 most common investment scams in South Africa: ETFs
Ramesh Ramdeen, chief fraud officer at FNB Wealth and Investments and Ashburton Investments, says South African investors need to be vigilant of an increase in potential investment scams.
“There are dozens of ways that crooks use to access people’s accounts, often masquerading as financial institutions,” Ramdeen said.
“If something seems strange to you, stop what you’re doing and contact your financial service provider or financial advisor directly. Never feel like you have to do something right away. “
Below, he unveils some of the most common investment scams in South Africa today.
High yield investments
This type of fraud typically involves an unlicensed person convincing an investor that an unregistered investment can produce a high return with little to no risk, Ramdeen said.
“If you are approached online to invest in any of them, you should be extremely careful – it is probably a fraud. If it sounds too good to be true, it probably is.
“Closely related, many scammers claim to work for an asset manager and even use fake copier websites with the names of real staff members of legitimate companies. Always check with different sources before parting with your money. “
Scammers can also ask for an upfront payment to gain access to a so-called bargain, Ramdeen said.
They will use words like regulatory fees, taxes, finder’s fees, commissions, or incidental charges to describe the fraudulent advance they are requesting.
“Fraudsters can even go so far as to pose as professionals in the financial services industry, such as a broker, to make investors feel more comfortable with them.
“Investors should be aware that fraudsters can even use official sounding email addresses. To avoid this pattern, investors should seek advisers. “
Many South Africans have encountered a pyramid scheme through a family member, colleague or friend. Although a pyramid scheme may seem similar to a tiered marketing program where income is based on the amount of sales, a pyramid scheme is an illegal practice.
“Participants in this program can only earn money by recruiting new participants and they also have to purchase a large inventory of one or more products.
“Be skeptical of stories where the recruiter got out of poverty and gained wealth through an investment program,” Ramdeen said.
Internet and social media fraud
Scammers use social media to appear legitimate through newsletters and blog posts. They also use it to collect sensitive information about you and spam you with unsolicited offers, Ramdeen said.
“This is a crucial awareness for investors. Just because someone is on social media doesn’t mean it’s a legitimate business. Social networks are increasingly fertile ground for crooks. “
People are tricked into clicking on links in emails or messaging apps that introduce malware to their devices, allowing fraudsters to get information about their confidential information such as banking and investment information, Ramdeen said.
“They then use this information to communicate with financial institutions to make withdrawals from investments and bank accounts. These phishing emails usually come from “trusted sources” which trick the recipient into believing it is okay to click on the links provided. “
Ramdeen said the best way to protect yourself is to “ think before you click, ” use anti-virus software, check the full name of the message, double-check the sender’s email, check some details. on mail and keep the operating systems on your phone. and computer up to date.
Identity theft is a major risk for people as our lives are increasingly online, especially during the lockdown, Ramdeen said.
“Identity numbers are stolen and used for the purposes of fraud, such as taking out loans, taking over accounts with financial institutions and withdrawing funds.
“To better protect yourself against identity theft, keep your passports, ID cards, driver’s licenses, utility bills and bank statements in a safe place – or shred old statements that you no longer need.”
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