Thinking Of Investing? Here's How To Protect Yourself From Falling For Investment Scams

If in doubt, check with relevant authorities like the Securities Commission.

Cover image via Árpád Czapp/Unsplash & Generative AI/Vecteezy

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This Spotlight is sponsored by the Securities Commission Malaysia (SC).

Securities Commission Malaysia (SC) Consumer and Investor Office general manager, Jawahar Ali Ameer Ali, said that the SC has recorded a significant increase of scam-related complaints since 2020

Jawahar Ali Ameer Ali, General Manager, Consumer & Investor Office of Securities Commission Malaysia

Image via Smart Investor

There have already been 2,524 scam cases reported to the SC as of the third quarter of 2023, which is more than the whole of last year combined. He added that the total losses suffered by scam victims reached tens of millions of ringgit.

While there are different kinds of scams, a common way that Malaysians fall prey is through "investment" opportunities. As a statutory body responsible for regulating the Malaysian capital market, it is the SC's mandate to ensure that investors are protected.

In an interview with SAYS, Jawahar shared insights and tips on how to avoid falling prey to scams:

Q: What are some of the steps taken by the SC in curbing investment fraud in our country?

Jawahar: "SC has taken a two-pronged approach to deal with this issue: Curbing scam activities through various prevention and enforcement actions; and empowering investors through investor education activities.

"In an effort to curb scam activities, the SC has issued notices to stop operations and block websites, Facebook accounts, Instagram accounts, and Telegram accounts involved.

"We also regularly update the Investor Alert List to guide the public in identifying between licensed and fraudulent investment companies."

Q: How can Malaysians spot the red flags in a scam investment?

Image via Vecteezy

Jawahar: "I want to share a very simple formula for every investor to remember before investing. If any investment opportunity fits these characteristics, then investors must be cautious.

"The T.I.P.U formula: T (Tidak akan rugi), I (Indah khabar dari rupa), P (Peluang hanya sekali), U (Untung besar).

"Scammers will usually promise a lucrative return in a short time without any risk. But this is just indah khabar dari rupa. There is no such thing as a risk-free investment, and if something sounds too good to be true, it probably is.

"They will then create a sense of urgency by pressuring investors to act fast and not miss out on this one-time opportunity. But this is just a tactic to prevent investors from doing their research.

"A common trap that many people fall for is when they see huge profits or evidence that are totally unrealistic. Scammers may show fake testimonials or screenshots of their earnings or payouts to catch your attention immediately."

Q: What are some best practices to avoid getting scammed?

Image via Unsplash

Jawahar: "Scammers are everywhere, and they are always looking for ways to trick you into giving them your money. They may use social media platforms, personal bank accounts, or fake investment schemes to trap you.

But don't worry, you can protect yourself by following these seven simple tips:

- Don't trust everything you see on social media
- Never deposit money into a personal bank account
- Check the SC website before investing
- Only deal with licensed entities
- Check the PDRM website
- If in doubt, check with the SC
- Investments must be made through an official bank account"

Q: What if investors become victims of scams?

Image via Freepik

"If investors unfortunately find themselves entangled with a scam, they should not panic, but take the following steps. 

"Do not make any additional payments to the scammers. This will only increase your losses and make it harder to recover your money.

"Keep a record of all information related to your investment such as payment/bank-in slips, receipts, and conversation records. These will serve as evidence for your complaint and investigation.

"File a police report and file a complaint with the relevant authorities such as the SC, Bank Negara Malaysia, or the Malaysian Communications and Multimedia Commission.

"You can also file a complaint with the SC through email ([email protected]), contact the Complaint Line at 03-62048999, or even make an appointment to see SC officials on this website."

Lastly, Jawahar reminds Malaysians to never invest in personal accounts or unknown companies, because, "Silap labur, duit lebur"

Image via Vecteezy

He highlighted that investing through illegal investment links can make you only lose all your savings then expecting profits. 

Thus, if you're planning to invest, always do your homework and don't let greed or fear cloud your judgment. Stay safe and invest smart!

Want to learn more about safe ways to invest? Visit InvestSmart Fest 2023 from 17 to 19 November!

The event will take place at the Exhibition Hall 4 in Kuala Lumpur Convention Centre. Visitors can enjoy exhibitions, talks, and panels that aim to help investors make informed investment decisions and avoid falling victim to scams.

Plus, there will be more than 500 free financial planning consultation slots with licensed financial planners available under the #FinPlan4U initiative. Find out more on this website.

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