Fraudcast: Why are investment scams so effective?

Finns lose dozens of millions of euros to investment scams every year. Why are these scams so effective and how will they look in the future? Nordea's anti-fraud experts Sara Helin and Annukka Multanen are joined by a guest, the Finnish writer and journalist Karo Hämäläinen.

Can't see the video? You can listen to Fraudcast directly on the following channels: SpotifyOpens new windowSoundCloudOpens new window ja YouTubeOpens new window. Podcast is only in Finnish.

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What is an investment scam?

An investment scam is a fake but extremely appealing investment opportunity. This opportunity is promoted on various websites and on social media. The scammer may try to lure people into investing in shares, funds, virtual currencies or binary options. What the investments have in common is that their future prospects sound almost too good to be true. If the victim clicks on the ad and submits their contact information, they start receiving numerous requests to invest in the instrument in question.

Often an investment scam will begin with an initial payment of a few hundred euros. The scammers will send their victim regular messages about the performance of their investment. In the messages, they will also ask the victim to invest more money in the highly profitable assets. In reality, the investment doesn’t even exist and the money paid by the victim is pocketed by the scammers. 

Investment scams have become increasingly common in Finland in recent years. Of all the different types of scams, Finns lose the most money to investment scams. The best way to avoid falling victim to investment scams is to learn how to spot them.

How to spot an investment scam

As with other types of scams, an investment scam usually starts by the scammer contacting a victim, for example, on social media, on WhatsApp, by SMS, via email or by phone. The scammers may also reach out to the victim through more than one channel to seem more convincing. 

The opportunity to get rich quick and convincing testimonials from other investors may make it difficult for the victim to question the legitimacy of the offer. If the offer seems too good to be true, take a moment to consider whether this could be the case. If you have any doubts, it’s a good idea to discuss the investment opportunity with your friends or family. 

Here are some red flags that can help you spot an investment scam: 

  • You are promised a high return for very little risk. If the investment opportunity sounds too good to be true, it usually is.
  • The investment opportunity is promoted online or on social media, possibly by celebrities.
  • The initial investment required is a few hundred euros. You may be promised a dedicated investment adviser or a team of advisers at the start.
  • You are rushed or pressured to make decisions. The investment opportunity is only available to a selected group of people, and it is promoted as an “exclusive offer” or a “limited edition”. The scammer tries to create a sense of urgency.
  • The scammer contacts you by phone or email to offer you an opportunity to invest. The call, WhatsApp message or email comes from an unknown person abroad. The language used is often English.
  • The service provider is not authorised by the Finnish Financial Supervisory Authority (FIN-FSA) to provide investment services in Finland or does not have an equivalent foreign licence accepted by the FIN-FSA. You can check the FIN-FSA’s registerOpens new window for authorised service providers.

How to protect yourself from investment scams

  • Check that the company offering investment services has a valid licence and find out for how long the company has engaged in investment activities.
  • Remember that virtual currency services will never contact customers by phone. They only provide a platform for trading.
  • Be cautious of investment opportunities which are aggressively promoted on the phone. The scammers try to pressure you into making hasty decisions by telling you that the offer will soon expire or that only a limited number of investors will be given the opportunity to invest.
  • You can make sure that a call you get comes from us by using the ‘Verify call’ feature in the Nordea ID app.
  • Check if the company is on the FIN-FSA’s warning list and try to find out further information on the company on the internet.
  • You should never allow anybody to install remote access software on your devices.
  • If you have any doubts, discuss the investment opportunity with your family, friends or bank.

What to do if you think you’ve fallen victim to an investment scam

  • Break off any contact with the scammers and stop making payments. 
  • Contact your bank. Once you have told your bank about the scam, file a police report. You can file a police report online at www.poliisi.fi Opens new window
  • Always follow the advice of your bank or the police. Don’t try to recover the money you have lost on your own. There are fake services online that promise to recover your money for a high service fee. In reality, these services cannot help you recover any stolen money.  
  • Remember that you don’t have to deal with the situation alone. Talk to your friends and family or reach out to Victim Support FinlandOpens new window via their chat, for example. 

If you suspect that someone you know has fallen victim to an investment scam, talk to them about it. You can also contact their bank to get advice.