The lesson in full
Scammers look like successful friends, helpful mentors and slick apps. Red flag 1: guaranteed high returns, like “10% a month”. That's over 200% a year, which no honest investment can promise.
Red flag 2: you earn mainly by recruiting friends. That's a pyramid or Ponzi-style scam: old investors are paid with new investors' money, until it collapses.
Red flag 3: pressure and secrecy. “Only today”, “last 5 places”, “don't tell your family”. Rushing you stops you from checking.
Red flag 4: a “mentor” or new online friend who wants you to move money to their platform or app. Scams like this steal billions every year.
- Common mistake
Mistake: trusting smooth, steady returns. Bernie Madoff paid calm “returns” for decades; when his Ponzi scheme collapsed in 2008, paper losses were about US$65 billion. Too smooth is a red flag too.
Your defence: search the firm on your regulator's register and warning list: OJK in Indonesia, CNMV in Spain, CNBV in Mexico, the FCA in the UK, the SEC in the US. Not listed? Walk away.
- Key takeaway
If it sounds too good to be true, it is. Check first, never rush, and never send money to someone you only know online.
Quick check
- A promise of “10% a month, guaranteed” is... A red flagCompounded, that's over 200% a year. No honest investment can guarantee it.
- Earning mainly by recruiting friends suggests... A pyramid or Ponzi schemeMoney from new members pays old ones, and it collapses when recruiting slows.
- Where can you check if a firm is licensed? Your national regulator's registerOnly the regulator's own website can confirm a licence. Ads and chat groups can be faked.
- A new online friend keeps urging you to invest on their special app. You should... Stop and check it with the regulatorSmall “test” wins are a classic trick to make you trust the app and send more.