5 ways for you to spot a scam

Have you ever been scammed? On several occasions I have heard stories or encountered situations where a scam was involved. The other day I tuned in to K24, one of Kenyan’s TV station, and viewed a story of an officer commanding police division Peter Mwanzo Nyaga who was defrauded, through mobile phone sim card swap, 597,000 kenyan shillings within five hours in one night. Someone else came to our work place and told us that we could travel cheaply around the world. This caught my attention because I love to travel. On further enquiry, I was required to pay a certain amount then recruit other people before I was able to comfortably travel. This raised a scam alert for me. Anyone can get scammed. It is not a matter of education or even career.

According to transunionafrica, the rate of digital fraud originating from Kenya decreased in quarter one 2022, with the percentage fraud attempts declining -60.9% from the same quarter last year, in line with the global decrease of -22.6% during that same time period. TransUnions quarterly digital fraud analysis observed that while the overall rate of suspected fraud declined in Kenya, there were significant shifts within certain industries. Transunionafrica noted that in Kenya, sectors such as financial services experienced a scam decrease at -71.5% while there was a scam increase in sectors such as gambling at 48.7% and travel at 25.1%.

According to investopidia, financial fraud occurs when someone takes money or other assets from you through deception or criminal activity. A scam is a type of fraud specifically involving money transaction with intent of cheating. The person carrying out a scam is called a scammer. If you would like to be a professional in matters of fraud examiner you can enroll in the course CERTIFIED FRAUD EXAMINER (CFE) – ACFE – FINSTOCK EVARSITY COLLEGE
As you are trying to make smart investments so as to create wealth and gain financial independence, there are scammers who want to exploit you and take your hard-earned money away from you.

We have stated 5 ways for you to spot a scam
1.You are promised higher returns than the average market and you are told that the investment is low risk.
Financially, high-risk equals to high returns and low risk equals to low return. Anything going against this is a scam. You may learn more about risk management in the course CERTIFICATE IN RISK MANAGEMENT (CIRM) – SCHOOL OF DEVELOPMENT STUDIES – FINSTOCK EVARSITY COLLEGE For example, in Kenya most Money Market funds are offering between 8-10% interest rate. If a certain company is offering a money market fund of 18% interest rate is a scam. In such a situation you should check the underlying assets of this money market fund. Most money market funds invest on similar assets, which are low risk and therefore you should be expecting low returns

2.The people selling you the product are pressurizing you to commit yourself immediately to the said product.

Any legitimate person selling to you a financial investment product, should give you time to do your research so that you may check if it aligns with your financial goals. It should also give you time to investigate whether the risk it presents is up your lane. If no time is given to you and the sales person makes it sound very urgent for you to invest, it is a scam.

3.For you to get returns, you have to refer several people.
Ideally you should get returns from the investment itself. For example, when you invest in the stock market you will get dividends from the stock that you have bought or once you sell the stock you will get profit from it. To understand more about stock market, Finstock offers a course on BASICS IN STOCK MARKET INVESTMENT (SMI) – BUSINESS AND STRATEGIC MANAGEMENT – FINSTOCK EVARSITY COLLEGE Even in a normal business when you sell goods, you intend to get profit from it. If you are to invest money and get returns from referring people, it is a scam. This is not an investment but a pyramid scheme.

4.There is no clarity on the underlying asset
When making a decision on investment, research on the financial investment product and the underlying assets stated by the company. For example, insurance companies offer different unit trusts at different interest rates. This is because the fund managers are investing the money in certain assets that might be similar or different. The insurance companies state these assets on their websites. You may also enquire more about the underlying assets from the company agents or representatives. If there is no underlying asset or it does not make sense to you, this is a scam. To learn more about insurance you may enroll in the course CERTIFICATE IN INSURANCE, MODULE 1 (CII1) – CII – FINSTOCK EVARSITY COLLEGE

5.There is no regulation
Different bodies in different countries regulate different financial investment products. For example, NSE in Kenya regulates the stock exchange and SASRA regulates SACCOs. Any financial investment product lacking regulation is a scam.
When you decide to invest in any financial product one should do a lot of learning and research because there is a lot of scams around. Finstock offers several courses about certain investment products such as BASICS IN FOREX TRADING (BFT) – FOREX AND CRYPTO TRADING – FINSTOCK EVARSITY COLLEGE and BASICS IN CRYPTOCURRENCY AND DIGITAL MONEY (FRBCDM) – FREE COURSES – FINSTOCK EVARSITY COLLEGE