“Join our investment group and make huge profits! FREE ENTRY”
“Get insider access to a high-performing fund—profits are guaranteed”
As 74% of Malaysians encounter a scam at least once per week, these are some of the messages that should get you on high alert. A large return on investment promised, very little effort involved, just one simple click. Beneath the excitement of an extraordinary return is a simple trap.
Always remember – if something sounds too good to be true, then it is potentially a scam designed to deceive and defraud you.
In 2023 alone, victims in Malaysia were scammed out of a staggering US$12.8 billion (or nearly MYR55.1 billion)! Malaysians are not alone in this battle, as over US$688.4 billion was lost to scams in Asia alone.
You read that right. According to the State of Scam Report 2024 by the Global Anti-Scam Alliance (GASA), this jaw-dropping amount accounts for 3% of the country’s GDP. That’s a massive hit to individuals and the overall economy, all thanks to fraudulent activities.
Rise Of AI Scams Using Deepfakes To Target Your Wallets
With AI technologies on the rise, scammers are becoming more creative with their fraudulent activities. They can now impersonate your family and friends using advanced AI tech to trick you into giving them money or personal information.
By manipulating videos and recordings from social media, creating eerily realistic voice recordings or even videos—these are known as voice cloning or deepfakes.
Besides those closest to you, high-profile and wealthy figures are commonly impersonated in deepfake videos hawking “investment opportunities”. Elon Musk has become one of the most frequently impersonated faces – appearing in many cryptocurrencies-focused deepfake videos. Other well-known profiles include Warren Buffett and Jeff Bezos. In Malaysia, public figures – including Prime Minister Anwar Ibrahim – has been impersonated in such videos.
In August 2024, scammers posted prerecorded deepfake videos of Elon Musk on YouTube under a “live” label, falsely claiming he would double any cryptocurrency sent to his account. These videos attracted hundreds of thousands of viewers, exploiting Musk’s influence in cryptocurrency circles.
A similar scam back in February 2023 tricked a Texan victim into losing USD36,000 worth of bitcoin after watching an impersonation of Musk during a fake live video. The victim reported to the Better Business Bureau, stating, “I sent my bitcoin, and never got anything back.”
Pump and Dump Schemes
In Malaysia, the Securities Commission is keeping a close eye on investors who are misusing social media to spread false info about certain companies for their own gain — specifically, through pump and dump schemes.
So, what’s the deal with pump and dump? Basically, such schemes are meant to create hype around a particular stock or asset with fake recommendations to inflate its price. Scammers spread false information to drive up its price. Once they’ve successfully manipulated the market, they cash out by selling their shares for a profit, leaving other investors holding the bag when the price crashes.
And it’s not just stocks, this kind of shady activity is also making waves in the crypto world. Groups of people can band together to pump up the value of specific coins. They start by buying it up to create buzz, then sell it off after they’ve caught enough attention from unsuspecting investors. It’s a classic scam that you definitely want to watch out for!
The Ponzi Scheme
Ponzi schemes have been a massive problem in Malaysia, hitting around 400,000 people and causing losses of about RM500 million. One of the biggest scandals was the Genneva Gold Futures case during pandemic where gold price rocketed and many investors got lulled into the scam. A total of RM5.5 billion was involved with 35,000 investors got caught up in the scam.
These scams lure people in by promising ridiculously high returns, like cash trusts offering up to 36% per year. But, of course, they’re too good to be true. Many of these are simply Ponzi schemes, sucking RM1 billion from the market in just a year. The damage doesn’t just stop at impacting the finances of unsuspecting victims, it also leaves a deep emotional toll on people who lose their life savings.
Stay Ahead Of Investment Scams
If you want to dodge investment scams, the first thing you need to do is stay informed and keep your guard up. The first layer of protection is your own investment expertise. Only invest in what you understand. If you’re not financially-savvy, there’s no need to invest for world-beating returns. Stay in the confines of very safe, well-known investments that give you average returns.
Before you make any investments, do your homework and don’t be shy about asking questions if something feels off. A great starting point is the Investor Alert List from the Securities Commission of Malaysia. This handy site is like a safety net, listing companies and people that aren’t licensed to handle investments. Do note that companies that are not listed on the site are not automatically trustworthy investments.
Stay alert to the language being used. Scammers love to use flashy language and fancy presentations to reel you in, so trust your gut and stay cautious.
If you’re ever feeling unsure about an investment, speak to a financial expert or a savvier family member who can provide clarity and help you avoid costly mistakes. A simple rule of thumb is to take your time before investing. Scammers also typically employ pressure tactics and language to get investors to feel FOMO and that they’re running out of time. Stay clear of anyone and any investment that carry such language.
By staying informed and maintaining more than a healthy dose of skepticism, you’ll be better equipped to protect your hard-earned cash from crafty scammers. Trust your instincts, stay sharp, and you’ll be on your way to making savvy investment moves without falling for fraud!
Read Also: How The 2024 US Presidential Election Could Impact The Malaysian Stock Market?
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