19/07/2020
💸6 Money Frauds💸
💲Affinity Fraud💲
The victims are usually members of a community or ethnic, societal, religious and close-knit groups. The fraudster finds a way to gain entry into this group and offers investing opportunities with high or safe returns to the captive audience.
💲Internet Investing💲
The fraudster sends e-mails from an authority figure in a trustworthy organisation like a renowned private bank, insurance or mutual fund company. He can also suggest transferring money into a better account, fund or policy or even offer maturity proceeds of your own policy. He then demands an advance fee to facilitate the transaction.
💲Pump and Dump💲
The price of a stock is artificially raised by fraudsters, invoking investors’ interest in it. They then sell their shares at the inflated price, reap rich profits and stop hyping the stock. The stock price falls drastically, resulting in losses for the investors.
💲Misselling Products💲
Banks are a fecund ground for such scams, where insurance is sold to unwitting customers, typically senior citizens, who are looking for an investment vehicle to park their life’s earnings. Life insurance is sold in the form of endowment or money-back plans to people who don’t need it and get very low returns.
💲Ponzi Schemes💲
One of the oldest investing scams, named after fraudster Charles Ponzi, the scheme promises high returns and is dependent on recruiting fresh investors to keep the plan operational.
💲Hard Money Lending Fraud💲
This fraud comes into play when home buyers need large sums of money to buy a house and investors want higher than normal returns. The latter offer cash to buyers at interest rates that are higher than those offered by lending institutions. Usually there’s a mediator involved and more importantly, no paperwork. The fraud takes place when home buyers fail to return the money. Without any legal documentation, the investor can do nothing to get the money back.
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Image credit: Freepik and Getty Images.
Source: Economic Times
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