If it walks like a duck, swims like a duck and quacks like a duck…
If you have clients who respond to the simplest of ‘hello’ messages from unknown phone numbers on their WhatsApp accounts, then it might be time for you to have a cold, dispassionate chat with them about data protection discipline, and how to spot and avoid financial scams. Two events triggered this morning’s newsletter: the first, a media release from the Association for Savings and Investment South Africa (ASISA); and second, a WhatsApp message offering yours truly a great job opportunity, sent from a number in Colombia.
Never answer that ‘hi, how are you’ message
The ASISA media release is headed ‘Expect investment opportunities punted via social media, Telegram and WhatsApp to be scams’. It is an elegant warning that should be expanded upon to include ‘job offers’ and ‘offers of ever-lasting love’. If your clients receive any of these, or even an innocent ‘hi, how are you’ message, they should respond by deleting the message, and blocking the sender. PS, if they are in any doubt over the veracity of your advice, steer them in the direction of one of the myriad Carte Blanche shows or YouTube documentaries that show these confidence tricksters at work.
Kudos to ASISA for raising awareness about the myriad financial scams that spring up globally each year. And extra thanks to them for offering some tips and tricks to spot and avoid same. First and foremost, you should stress to your clients that financial scams are getting more sophisticated by the day, often involving teams of criminals making a full time living from prospecting for potential victims. These guys are literally sitting in an office somewhere, sharing notes with one another on what works and does not, and getting lashed by their criminal overlords for coming up short on their monthly sales (sic) targets.
Be extra cautious on Telegram, WhatsApp
The association warned all and sundry to be ‘very sceptical’ if they encounter an investment opportunity being promoted on social media channels, and especially in public groups. They said that reputable financial services providers should not be selling policies or investments via a WhatsApp group or similar, or via unsolicited emails and random phone calls. Jean van Niekerk, convenor of the ASISA Forensic Standing Committee, said the association’s members had seen a sharp rise in fraud committed via social media in recent years, prompting the warning to consumers. He offered the following list that advisers can discuss with clients:
- If you are tempted by an investment opportunity being promoted on Telegram, a WhatsApp group, or any other social media channel, take the time to verify the opportunity and the company offering it. And never fall for the common scamming trick of putting you under pressure to make an immediate decision.
- Telegram is popular with cybercriminals because of its anonymity features; if you are approached via Telegram with an investment opportunity or are encouraged to switch to Telegram to finalise a transaction, your alarm bells should be ringing.
- ASISA member companies will not ask you to open a cryptocurrency account to transfer money into an investment account. When this happens, you are about to be scammed.
- No regulated life company, investment company or financial advice company will send you links requesting you to log in or share personal details via WhatsApp, Telegram, text messages, email or social media platforms.
- You cannot invest in a regulated financial product without going through the verification process required by the Financial Intelligence Centre Act (FICA). Any process that requires you to deposit money without following this process is a scam.
- Do not fall for a scam twice by paying an advance fee when you want to realise some of the promised returns. Legitimate investment products do not require you to pay additional money in order to gain access to your investments.
- If you are charged an annual premium for life cover without specifically requesting this, you are likely to be scammed. South African life insurers offer monthly premiums as well as annual or once-off premiums.
- ASISA members will never charge applicants an application fee for an advertised employment opportunity.
- If you apply for a short-term loan and the lender instructs you to pay application or legal fees to process your application, you are being scammed. Reputable companies will not ask for fees in advance for loan applications.
Beware, the online scammers are getting cleverer
According to Van Niekerk, the association’s members are aware of many heart-breaking examples of financially vulnerable consumers being tricked into parting with the little money they have left. “Most recently, a large asset manager alerted us to a WhatsApp scam using the profile and photo of the company’s CEO and targeting members of a support group for unemployed teachers,” he said, adding that scammers often create false marketing material using the logos of well-known regulated companies. This material is then distributed indiscriminately to millions of users via the aforementioned social media channels. Typically, these messages promise never-to-be-repeated investment returns.
At this point, your writer punched a quick question into his Chat GPT companion. “What is the most common sign of an investment scam?” he asked. The response, verbatim: The number one sign that an investment offer is likely to be a scam is the promise of high returns with little or no risk. Legitimate investments always carry some degree of risk and any offer that guarantees unusually high returns with minimal risk should be viewed with extreme suspicion. High returns are a classic red flag for a scam, often seen in Ponzi schemes and other fraudulent investment opportunities.
If desperate, think thrice
“When you are desperate, and you see the CEO of a big financial services company promise huge investment returns, validated by fake testimonials, it is easy to throw caution to the wind and click on a link or make an investment,” said Van Niekerk. Hmmm… Perhaps there should be some kind of tacit agreement between financial adviser and client that any new or potential investment is run by the adviser first. For those who are not privileged to have a financial adviser on call, there is always the Financial Sector Conduct Authority (FSCA) hotline. This writer has not used the service before, but is fairly certain that consumers can at least get surety that the company they are dealing with is licensed etc.
However, given the admitted use of company names and logos to masquerade as legitimate concerns, a phone-call to the FSCA might not be enough. The only way to really protect yourself and your clients is to hold any potential investment up to each of the bullet points shared earlier in this article. Van Niekerk noted that the CEOs of reputable companies would not promise outlandish investment returns to sign up investors or sell policies. “If you come across a group where the CEO of a financial services company appears to punt investment returns, you can be absolutely sure that this is a scam,” Van Niekerk said.
On ducks and financial scams
ASISA is appealing to consumers to check with their advisers and do due diligence research into the companies they intend investing through before handing over their hard-earned money; waiting until after you have hit ‘send’ on your banking application is too late. FAnews reckons the same, and we add that age-old bit of common sense for identifying a financial scam. It reads: If it looks like a duck, swims like a duck and quacks like a duck, then it is most likely a duck. Swap scam for duck throughout and stay safe out there.
Writer’s thoughts:
Not a day goes by that a text message, email or WhatsApp chat lands on your writer's smartphone offering insane riches for an immediate responses. What is the most realistic financial scam you have encountered, and how do you warn clients against same? Please comment below, interact with us on X at @fanews_online or email us your thoughts [email protected].
