By: Chioma Madonna Ndukwu
Before You Invest, Spot These Warning Signs
A stranger promises to triple your money in weeks. The offer sounds tempting, but before you transfer a naira, there are questions you should ask.
Scammers know that the promise of quick money is difficult to resist. They exploit that temptation through WhatsApp, Telegram, Facebook, Instagram and other online platforms.
Some create professional-looking websites and social media pages, while others display testimonials, payment alerts and screenshots of supposed profits to make their schemes appear genuine.
But one of the biggest warning signs is a promise of extraordinary returns with little or no risk.
The Securities and Exchange Commission (SEC) describes Ponzi and pyramid schemes as fraudulent investments that promise “high returns with little or no risk involved.”
That promise should immediately raise suspicion. Legitimate investments carry risks, and unusually high returns generally come with greater risks.
A second warning sign is an unclear business model. Before investing, ask what the company actually does, how it makes money and how your investment is expected to generate returns.
If the promoter cannot explain the business clearly but keeps talking about how much money you could make, step back.
The SEC advises investors to understand the investment, examine the product or service involved and determine whether the promised returns are sustainable.
Recruitment is another major red flag, especially when participants are encouraged to make money mainly by bringing in friends, relatives or colleagues.
In a Ponzi scheme, money from newer participants may be used to pay earlier ones, creating the impression that the operation is profitable.
As long as new money keeps coming in, the scheme can appear successful. When recruitment slows, withdrawals may become difficult and the operation can collapse.
Pressure to pay immediately is another tactic scammers use.
You may be told that an offer expires within hours, that only a few spaces remain or that your account will be closed unless you transfer money immediately.
The United States Federal Trade Commission (FTC) warns: “Scammers use pressure, so you don’t have time to think.”
That is why urgency should never replace verification. A genuine investment opportunity should give you enough time to ask questions, examine documents and seek independent advice.
Crypto investments require the same caution. Cryptocurrency itself is not a scam, but fraudulent operators can use digital assets to disguise investment schemes.
A platform may show impressive profits on your screen while making withdrawals difficult. Some may later demand additional fees, taxes or deposits before allowing you to access your money.
Another trap is fake evidence of success. Photographs of people celebrating, glowing testimonials and screenshots of bank transfers do not prove that an investment is legitimate.
Even receiving a small withdrawal at the beginning should not automatically establish trust. Fraudulent operators may allow early withdrawals to convince participants to invest larger amounts later.
Be equally careful when anyone requests your password, PIN, one-time password or other confidential banking information. Protecting your money also means protecting the information that gives others access to it.
Before investing, verify the company independently. In Nigeria, prospective investors can check whether an investment operator is registered with the SEC rather than relying on information supplied by the promoter.
Do not assume an opportunity is genuine because it was recommended by a friend, colleague or relative. Someone you trust may have been convinced by the same claims.
The strongest protection is to slow down when someone wants you to act fast.
An investment that promises huge returns, depends heavily on recruitment, hides its business model or pressures you to pay immediately deserves more questions, not your money.
Before you invest, look beyond the promise of profit. Check the company, understand the business and verify the claims.
If you cannot clearly understand how your money will make money, do not rush to invest it.
