Emily Guy Birken recently shared with a friend a pitch she received that ended with a frantic “close.” Birken said she was still considering the offer, which promised to help her find clients for her freelance work.
“How do you know it's not a scam?” a friend asked.
The unexpected question caught Birken off guard. She had recognized the signs of a pushy sale from the start, and was even prepared to walk away from the call. Still, she felt a little hesitant about the offer.
After a few seconds of thought, Birken was able to explain how she knew this wasn’t a real scam. The company offered a real service that identified and contacted potential customers, something the author could have done herself. They weren’t scamming, they were simply using high-pressure sales tactics.
However, your friend’s question is a valuable reminder of how easy it is to fall victim to investment scams, whether investing in a business or your personal financial future. That’s why it’s important to understand the common types of investment scams and how to spot them.
The nature of the scam remains unchanged.
Despite the increasingly sophisticated tactics and the modern technological trappings, the core nature of investment scams remains the same. They have been around for as long as the “Nigerian prince” sent the first phishing email.
Even so-called “modern” scams, like the collapse of Sam Bankman-Fried’s crypto empire FTX or the delusional craze around NFTs (non-fungible tokens), exploit the same inherent human weaknesses: greed, fear of missing out (FOMO), and the mistaken belief that it’s possible to make money without truly understanding the investment.
This is why most investment scams are just repackaged versions of decades-old scams.
The financial world is growing, but it is also fertile ground for sophisticated scams (Illustration: Adobe Stock).
Here are four common scams that anyone can fall for and how to recognize them to avoid falling into their traps.
Promise of "huge" profits, no risk
A century ago, Charles Ponzi shocked Boston by promising 50% returns in just 45 days on investments in international postage coupons. The essence of a Ponzi scheme is that there is no real investment activity. Instead, new investors’ money is used to pay off previous investors – creating the illusion of steady, attractive returns.
This model can only survive when new money keeps pouring in. When confidence drops or investors pull out en masse, the whole system collapses. A typical example is the Bernie Madoff scam in 2008, which caused tens of billions of dollars in losses.
The telltale signs are promises of unreasonably high returns in a short period of time, paid out regularly, and with virtually no risk. If an “investment opportunity” sounds too good to be true – it probably is.
Pump-and-Dump: Manipulating Stock and Cryptocurrency Prices for Profit
This is a blatant market manipulation tactic, often targeting small, little-known stocks or fledgling cryptocurrency projects. Scammers will buy at low prices, then spread rumors or promote heavily to create a FOMO (fear of missing out) effect, causing prices to skyrocket. When prices peak, they quietly dump, leaving later investors holding “hot coals”.
This form is very popular on less reputable exchanges or social networking groups, where information is unverified and herd mentality is easily manipulated.
The telltale sign is when you receive an offer that sounds flattering and urgent, like “Someone as smart as you can’t miss this once-in-a-lifetime opportunity” or “Hurry up, it’s almost gone!”. Tactics that appeal to emotions, especially greed and fear, are always signs of a scam.
Advance-fee scams: Promise big money, ask for small transfers
This is a scam that preys on greed with an attractive promise: you will receive a very large sum of money – an investment, an inheritance, or an unexpected bonus – but to receive it, you must pay a “small fee” up front, under many names such as “account opening fee”, “application processing fee”, “legal fee”...
However, after you transfer the money, that “large sum of money” will disappear like a soap bubble, along with the person who just contacted you.
Any offer that requires you to transfer money up front in order to receive a large sum of money should be a red flag. In legitimate financial transactions, all fees are transparent, there are clear contracts, and no shady upfront payments are ever required.
Impersonation scams: Impersonating experts, banks, relatives to gain trust
The rise of deepfake technology and AI has made impersonation easier and more dangerous. Scammers can impersonate anyone: financial experts, bank employees, or your loved ones. They contact you via email, social media, or even phone calls with “real-sounding” voices, then lure you to professionally designed fake websites.
Just a moment of letting your guard down can lead to you giving out personal information or even transferring money as directed by the impostor.
Signs include unexpected financial offers from people or organizations you know but contacted through unofficial channels, often with links or requests for sensitive information. Always be skeptical and double-check the identity of the person you are contacting, especially if the conversation involves money. Never trust someone just because they “look legitimate.”
Financial scams are getting more sophisticated, but the common thread is still the same: greed, haste, or fear of missing out. Keeping a cool head, checking the facts thoroughly, and never rushing to transfer money or give out personal information are the best defenses. In the world of investing, if something sounds too good to be true, it probably is.
Source: https://dantri.com.vn/kinh-doanh/4-chieu-tro-lua-dao-tai-chinh-tinh-vi-ban-can-biet-de-tranh-mat-trang-20250530183437948.htm
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