Why Do We Fall For Easy Money?

 

Dato Ramanan Ramakrishnan Helping Malaysian Indians That Were Cheated By VenusFX

How many times have we come across news from the media or friends that so and so just became a victim of an investment scam? Every so often, despite numerous notifications and alerts to scams, many do unfortunately get convinced to part with their cash, especially when times are hard and people are susceptible to money generating ideas.

These swindlers promise high returns with low risks, always presenting a new innovative way of investment and pretending to know or have inside information that could lead to more guarantee of returns for the investor.

For instance, take the example of the recent reports filed against a VIP couple over an alleged forex scam in Malaysia. Many victims turned up and came forward into the light to relay their plight to the media, in hopes of recovering their money scammed by these unscrupulous individuals.

The victims began to realise that they were duped when they did not see the promised returns after handing over their money. Some even reported that they had received some initial returns which enticed them to part with more of their money since they thought that it would bring them more riches.

It is laudable that a prominent social advocator against Ponzi Schemes, Dato’ Ramanan Ramakrishnan, spearheaded the movement to bring justice for these unfortunate victims. The press secretary to the Senate President of Malaysia and former treasurer-general of MIC, Dato’ Ramanan, joined the victims in filing police reports against a foreign exchange company owned by a Datuk Seri and his wife.

Dato’ Ramanan Ramakrishnan

All victims claimed that they were promised daily returns which have yet to be given to any of them. One investor was said to have invested about RM55 million while about 20,000 investors credited a minimum of RM2,000 each into the forex investment company.

Dato’ Ramanan said the couple had used names of Malaysian leaders in their schemes to offer investment banking licenses, to influence foreign forex operations, to invest in their company. As millions of money was alleged to be cheated, you can imagine the fraudsters spending and living the high life through the expense of others without any intention of returning the pool of money. More often than not, the law catches up with them as the victims wises up in time but by then, it is already too late for the victims to recover their money.

At times, we wonder how we could avoid falling for these promises of investment returns that seem too good to be true. With the economic downturn, the likelihood of a long-term recession and the anxiety of declining savings, this sets up the perfect scenario getting ourselves lured by fraudsters into investment scams.

Trouble is, as many people are on the lookout for ways to stretch their money and to increase their dwindling income, many scammers are out to pounce on our susceptible situation, offering a way out with their fraudulent schemes.

All victims claimed that they were promised daily returns which have yet to be given to any of them. One investor was said to have invested about RM55 million while about 20,000 investors credited a minimum of RM2,000 each into the forex investment company.

Dato’ Ramanan said the couple had used names of Malaysian leaders in their schemes to offer investment banking licenses, to influence foreign forex operations, to invest in their company. As millions of money was alleged to be cheated, you can imagine the fraudsters spending and living the high life through the expense of others without any intention of returning the pool of money. More often than not, the law catches up with them as the victims wises up in time but by then, it is already too late for the victims to recover their money.

At times, we wonder how we could avoid falling for these promises of investment returns that seem too good to be true. With the economic downturn, the likelihood of a long-term recession and the anxiety of declining savings, this sets up the perfect scenario getting ourselves lured by fraudsters into investment scams.

Trouble is, as many people are on the lookout for ways to stretch their money and to increase their dwindling income, many scammers are out to pounce on our susceptible situation, offering a way out with their fraudulent schemes.

How To Spot A Ponzi Scheme A Mile Away

Although many precautions apply, here are some ways to consider protecting yourself from falling victim to a Ponzi Scheme.

  • There’s no such thing as high returns, low risk investment

If there was, you wouldn’t be reading this article. It pays to be super cautious when someone tries to sell you an investment promising huge or immediate returns for little or no risk. It should set off some warning bells that some sort of fraud could be involved. If the returns are being generated by something that you’ve never heard of or know nothing about, making it impossible to follow through, you need to take a step back.

  • Don’t be lured with a bait

There will be instances when someone contacts or communicates with you unexpectedly, offering invites to you, your family and friends to attend an investment seminar with promises of ‘grand prizes’ to be won if you attend the session. Don’t take the bait! This should raise alarms to your senses of a possible scam. This trick is often targeted at elderly people or seniors that are close to retirement and have a collected amount of EPF monies to disperse.

  • Research and investigate the seller

Whatever entity approaches you, be it a broker, trading company, financial or investment advisor, try checking them out over the internet, Securities Commission Malaysia (SCM) or Bank Negara Malaysia (BNM), to verify if the professionals are licensed or if there are any negative reports about them. Performing these background checks can at least help you determine if they are genuine or otherwise, so put on your Sherlock cap!

  • If the investment is not registered, it’s not legitimate

The number one indicator that an investment is not legit is when it is not registered with SCM or BNM. Always ask the person offering the investment why it’s not registered or if you’re told that it is, check it out against the database of SCM or BNM. You can also try checking this Facebook address, Ponzi Scheme Alert in Malaysia to verify if they are fake investments.

  • If you don’t understand, don’t commit

If you don’t understand the investment scheme, you should not pour money into it. Never write a cheque to or open an account, with anyone who doesn’t fully answer your questions. Don’t fall for anyone who tries to discourage or deflect your questions or using the excuse saying that the investment is using secret, exclusive formulas or strategies too complicated for people to comprehend. As the saying goes, never take a swan dive if you don’t know how deep the water is.

What to do if you’re scammed

If you think you are being victimised in an investment scam or a Ponzi scheme, lodge a report with the SCM or BNM. The sure sign that you’ve been scammed is when you’re unable to obtain the promised returns or cash out. In some cases, the scammers even offer higher returns to discourage investors from departing the schemes.

The bottom line is to know who you are dealing with and understand the investment before you hand over your money. Be extra careful if you get unsolicited calls or communications about an investment. If you suspect that it’s a fake investment scheme, report it to the authorities and let them verify it legitimately. It’s better to be safe than sorry.