Tips from the Bank of Lithuania on how not to lose money

“Quick and profitable investment”

Let’s start with the classic scams. On scams, websites, social media, or by contacting a person directly by phone, scammers spread ads offering “profitable investments”, their funds in various investment products (eg Forex, binary options, also known as options). binary, virtual assets, stocks). , bonds, oil, gold). This appeals to a person’s desire to win quickly and without doing anything, to solve financial problems, but without really understanding what they are investing in, a person only loses money and causes (additional) problems.

It often turns out that such online platforms are not licensed or maintained anywhere, but they are fictitious, configured to attract money or operate on the basis of financial pyramids. In most cases, clients, or rather victims, need to decide on a “profitable investment” quickly, without having enough time to assess all the risks. After the client transfers the funds and after a time to recover them, the representatives of such bogus investment platforms refuse to pay the funds, block the client’s account or after some time to close their website completely. In such cases of fraud, no investment is made and clients’ money is fraudulently diverted.

To attract as many customers as possible, scammers often use a variety of aggressive marketing tools, offering “non-refundable money to start trading”, “bonds” for investments, various tax discounts, gifts, the opportunity to trade in a demonstration of a trading platform or trading training. Often these are empty promises to attract as many customers as possible and persuade them to transfer as much money as possible. Often, the client is initially encouraged to try investing a small amount. After a relatively short period of time, like a week, your account shows very profitable investment results. They are fake, but the customer is tempted to invest more and more. Such a fraud scheme can continue for a long time, fraud becomes evident when the client decides to withdraw the invested funds and the “profit obtained”.

Refunds are empty expectations or even a threat

Residents, realizing that they have lost personal funds, often turn to financial institutions that have issued payment cards with requests to initiate a chargeback procedure to help recover lost funds. They base their request on the fact that they were not provided with an adequate service. Especially since pre-investment scammers often explain that in the event of a failure, customers will be able to easily recover funds from credit card issuers. However, it is not possible to recover lost money, because the bank or other institution that issued the payment card has no right to return (cancel) payments in such cases.

The refund (cancellation) procedure also involves fraud, where a representative of a consulting company contacts a client who has lost money, who supposedly helps to recover the lost money and offers his services for a fee of several hundred euros. Clients who are attracted to this offer not only fail to recoup the money invested, but also lose the money they pay to the person who introduced themselves as a consultant.

Caution: financial pyramids

A popular marketing technique used by scammers is to try to engage others in customer loyalty schemes by inviting them to join the Affiliate Program. Your participant has to advertise the services provided by the company on various Internet or social media portals, share information about the supposedly obtained profits and invite other people to become clients of the company, start to trade and transfer the greatest amount of money possible. The affiliate program participant must also share information about the commissions received for attracting new customers and inviting other people to participate in the affiliate program. The person participating in this scheme is interested in attracting as many customers and participants in the Partner Program as possible, as the company promises to pay you for each customer attracted and the amount of funds invested, as well as for each new participant in the Program. Whether you pay is another matter.

Affiliate program activities that promote services provided by illegal businesses are also illegal, and these individuals may be exposed to law enforcement. We recommend that you avoid offers to make money by investing in the services of illegal companies and advertising illegal services.

See not only what, but also where you invest

While online investing often seems attractive and convenient, you should also evaluate the means by which you invest, such as the software you install, whether it can automatically execute customer transactions and settlements, debit money from your account or credit card without the consent of the investor. gaps and so on.

Cybercrime also does not prevent the market for investment services. Therefore, online investors should also assess the risks that may be associated, for example, with duplicate websites created by copying the websites of real licensed companies, or with counterfeit websites designed to misappropriate investor funds.

One of the most common patterns of online fraud involves misappropriation of personal and payment data. When a client who decides to invest logs in to his trading account, it is alleged that for technical reasons it is not possible to transfer the money intended for the investment. The company’s representative, whether a broker or investment advisor, offers assistance, which can be provided by manually entering payment details into the settlement system. After the customer discloses their details, the payment is successfully executed, but after a while it turns out that by using the disclosed data, the scammers have misappropriated some or all of the account funds. Therefore, we strongly recommend that you do not disclose your payment details to anyone under any circumstances.

Three prudential rules for retail investors are remembered:

• The first rule is not to invest in products you don’t know about. Despite this advice, you risk not only losing your savings, but also going into debt.
• The second rule is to check whether the institution offering investment services has the necessary license and can provide services in Lithuania, as well as to search the website for information about the company offering the services.
• The third rule is to avoid offers that promise “quick enrichment” and “no risk”.