Scam Works Best With Greed

SCAMMERS are turning to successful professionals to sell their get-rich-quick schemes to unsuspecting customers.

Describing this group as very vulnerable, Securities Commission (SC) deputy general manager Khairul Ridzwan Abdul Kudus points to the victims’ failure to check whether an investment is licensed and legit to explain why they get in trouble.

Those in the prime of their careers are easy targets because they have money, he says. Victims, he observes, are typically male and in their 40s. They’re earning more at this point in their lives and are looking beyond the banks for investment opportunities. Because of their stature and education background, they’re reluctant to check with the authorities and question the scheme when approached to invest.

Despite not being well-versed in the capital market, they think they know everything – but a little knowledge is a dangerous thing. And, unlike before, those who offer unlicensed schemes now use flashy brochures and websites to appear more convincing.

“It’s a boost to the ego when they’re asked to invest. Saying no could result in ridicule. Victims fear being called a cheapskate or someone who’s not financially savvy,” he says, warning that alarm bells should ring if you’re promised risk-free, hefty or guaranteed returns.

He also cautions investors against relying on word of mouth endorsements, especially from friends and relatives. If these investment recruiters have joined a scam, they’ve probably only seen paper profits but have yet to cash out. It’s when they try to get the money out that problems arise.

“And be very careful if you’re dealing with an overseas investment company because you’ll have to know about complex foreign laws to ensure that your money is protected,” he says, adding that even students aren’t spared.

Criminals now have their sights set on youngsters – especially university students and fresh graduates – to both “sell” an investment and to invest in the scheme themselves, he says.

Fresh graduates are recruited as trainees in unlicensed trading companies. They’re paid a commission and promoted if they bring in investors who are most likely friends and family. And those who are still in university tend to fall for online forex (foreign exchange) schemes. The danger is that it’s very easy to part with money on the Internet.

Scam trends, he notes, move with “whatever’s hot in the market” – gold, forex, oil, and even so-called syariah schemes have all been used to dupe gullible investors. Don’t be taken in even if a famous celebrity or VIP is a director in the company because that doesn’t make the business legal.

Recently a get-rich-quick scheme by a foreign-based company was being promoted here under the guise of bond investments. But, he cautions, even legit investments overseas need the SC’s approval if offered to the Malaysian public. Scamming methods too, he says, move with the times.

With the Internet, Khairul Ridzwan is concerned that foreigners can easily target Malaysians via e-mails, websites and social media. When you deal with foreign investments, anything that goes wrong must be dealt with it in the country of origin, he warns.

“There’s been a rise in social media marketing and private group messaging recruitments. Facecbook and WhatsApp are popular. Twenty years ago, it was e-mail and word of mouth. WhatsApp is what we’re most worried about because it’s not something we can easily monitor.”

He explains that when people get involved in unlicensed schemes, it’s difficult for the SC to help get their money back. The SC is especially unsympathetic to those who are fully aware that a scheme is unlicensed and jump in early with the hope of making a killing.

“In the past, we managed to give restitution to some investors in the SwissCash scheme but this is a rare example. So it’s important not to get involved in the first place.”

It’s crucial to have something that links the scam victim to the perpetrator, he says.

“Documentation is everything. If it’s just a website with sketchy details or a ‘mule account’ where the victim’s money stays in an account for less than a day before it’s moved elsewhere, how do we track it down?”