Be vigilant about investment fraud
Fraud is one of the most reported on crimes in South Africa, right up there with rape and murder.
Not surprising when, according to a 2018 global economic crime and fraud survey undertaken by PWC, economic fraud in South Africa is a staggering 77% - significantly higher than the global average of 49%.
It is little wonder then that economic fraud, particularly investment fraud, is making headlines, with two such stories in last week’s ZO Weekender edition.
It is evident from the article about Direct Fund Holdings swindling one Richards Bay family out of R15 000 - and surely more out of countless other victims - that economic fraudsters are becoming more savvy, often giving potential victims no reason whatsoever to smell a rat.
The victim is quoted in this particular article as saying he should have done more research, and urging other people to undertake thorough research of any company before becoming involved.
But if, as in this case, the company in question is registered with the Financial Services Board among others, how are people to know it is not legitimate?
Another issue surrounding the apparent legitimacy of this particular company is that it had offices in both KZN and the Eastern Cape, and that their KZN offices were in Old Mutual buildings.
This would have, in the potential victims’ minds, tied Direct Fund Holdings to Old Mutual, a reputable financial services company, lending more credibility.
There are steps to take to avoid becoming the victim of a financial scam, but perhaps the old adage ‘if it seems too good to be true, it probably is’ should never be underestimated.
Tying into this is the ‘don’t chase phantom riches’ tip given by experts.
Speaking in particular about investment scams, experts advise people to be sceptical of investment pitches that guarantee a certain return or promise spectacular profits.
This is because every investment involves risk and no sales person can make any guarantees.
Another key tip is to be wary of pitches that focus on testimonials from other investors; you never know if these people and their investments truly exist.
It is said that under 25s are increasingly at risk of becoming fraud victims.
Perhaps the fact that this generation is more technologically-minded, coupled with the increasing fraud in cryptocurrencies (digital currencies) is a contributing factor.
When all is said and done, economic fraud is on the rise and people, especially in this time of high unemployment, need to be more careful than ever to avoid becoming a victim.