How to spot financial fraud

Do you need a loan or have you received emails requesting the login credentials of your current accounts? Learn first of all to recognize financial scams because they have increased dramatically and the web is a breeding ground for bad guys.


The financial scams not only take place online but also when you are at your door people who promise loans with dizzying figures or private funding are too convenient.


To avoid falling into these traps we must first of all know about financial scams and learn to recognize the standard by which financial scammers operate. Let’s find out together what the identity of the scammer is, the ways in which he scams and how to protect ourselves.


What is financial scam


When the scam involves financial assets, it is called a financial scam. The constant in financial scams is always one: the loss of all or most of the invested assets which, unfortunately, are unfortunately difficult to recover from the unfortunate investor.


Financial scams can be carried out by persons authorized to carry out financial activities, through the exploitation of direct contact with their customers, but also by the conduct of unauthorized subjects and in this second case, in addition to the scam, we have financial abuses.


There are many concrete ways in which the scam can be concocted. The cunning and imagination of scammers seems to have no limits and every day they have to deal with new and more and more elaborate deceptions. Thus, alongside gross scams, identifiable with common sense and a little attention, there are very sophisticated and well-orchestrated scams, which can represent a serious pitfall for savers and, sometimes, for the entire financial system.


A rule to always keep in mind when investing is that no one gives anything away and, therefore, there is no deal of the century and there are no easy methods to ensure safe earnings. Moreover, those who offer the deal of the century almost always try to make the potential investor hurry by telling them that this is an opportunity to be seized on the fly. P.E.L Consultancy Services helps corporate clients recognise risk and protect themselves from it.


What is the most frequent financial scam 


The most frequent type of financial scam in the last hundred years is certainly the so-called pyramid scheme, also known as the Ponzi scheme, taking the name of its creator. It is a type of financial scam that does not seem to care about the signs of aging.


The Ponzi scheme is a fraudulent activity in which whoever enters first obtains economic returns at the expense of subsequent “investors”. In other words, it is a kind of “chain of Saint Anthony”, in which very high interests are promised, paid to the “investors” through the money contributed by the new subjects who subsequently joined the scheme.


The game works as long as the ability to attract new participants remains high. When, on the other hand, the new incoming money is no longer able to cover the interests promised to those who are already involved in the scheme, the circuit is blocked, manifesting its nature as a scam.


The characteristics of the most frequent financial scam 


As we said before, the most frequent financial scam in the last hundred years is the Ponzi scheme whose main characteristics can be summarized as follows:


The prospect of making huge gains in a short time and with little risk, thanks to the work of a “financial magician”.


A smoky documentation, partially covered by secrecy or characterized by speculative investments generically qualified as “high finance”.


A group of participants who are not competent in financial matters or who have placed a great personal trust in the organizer of the system.


An investment activity linked to a single promoter or company or product.


A very high riskiness that grows with the increase of participants and is not, however, normally perceived by those who have joined the scheme: the remuneration regularly received in the early days leads, in fact, to think that participation in the scheme is a serious and solid investment opportunity.


How to defend yourself from financial scams


Often, the success of a financial scam depends not only on the “skill” of the scammer, but also on the behavior of the investor who is blinded by the promises of high earnings, without stopping to ask the reason for the high interest promised. Scammer and scammer are often actors in the same game in which, however, the one who is destined to lose is always the investor.


To be able to defend yourself successfully from financial scams it is essential to never let your guard down and above all:


Compare the promised return with that offered in the same period by traditional intermediaries (e.g. Banks) and ask for the concrete reasons for such a significant deviation in the promised earnings.


Be wary of “zero risk” investments which at the same time ensure high returns.


Investigate, also through the use of private databases, the characteristics of the financial instrument proposed by the person proposing it.


Acquire as broad a knowledge as possible of the products offered, also by carefully reading the available documentation that we must always request.


Make payments through traceable tools.


Meditate thoroughly before involving friends and relatives in the same investment (even if you have already had some earnings), as you could find yourself innocently “accomplices” of the scam.


Only by carrying out the aforementioned tasks before investing will you be able to safeguard your savings, otherwise you risk losing part or all of the invested capital. We know you don’t have the resources or manpower to find the kind of information you need, but we do. Hire professional investigators to find what will fuel your financial future. 


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