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Invest­ment fraud

“Invest­ment fraud” involves fraud­u­lent invest­ments. To this end, brazen finan­cial ser­vice providers lure cus­tomers willing to invest with promises of high yields. Yet above all, those sup­pos­edly large profits hide high risks – and fre­quently even illegal machinations.

Please ensure you always observe the fol­lowing rules of conduct:

  • Take your time to decide where and whether to invest your money.
  • Don’t let your­self get daz­zled by any unre­al­istic promises. No rep­utable finan­cial ser­vice provider would ever promise to achieve above-average returns in a short period of time.
  • You should always research a provider, for instance on Google, Internet forums and con­sumer pages.
  • Check whether the provider is FINMA-autho­rised or appears in the FINMA alert list or the IOSCO Investor Alerts Portal. You should also check Swiss providers’ cer­tifi­cate of reg­is­tra­tion on www.zefix.ch.
  • Con­tact your main bank’s cus­tomer adviser if you are unsure.
  • With for­eign providers, you should always check who you can con­tact in case of problems.
  • Next to their nov­elty value, inno­v­a­tive tech­nolo­gies and prod­ucts (such as crypto-cur­ren­cies) also har­bour risks.

Gen­er­ally, the fol­lowing applies:

  • Where there is a promise of appar­ently quick profits, remember that one simple truth: There is no quick money without any risk of loss! Those who believe this lose out!

This is how a typ­ical attack works

Phase 1: Baiting

You can find “invest­ment fraud” anywhere:

  • In Internet ads, for instance on social media platforms
  • In spam mail ads
  • In mag­a­zine or news­paper ads for lucra­tive investments

Links inside such ads lead to spe­cially pre­pared web­sites. In some cases, celebri­ties are used to adver­tise that they have already suc­cess­fully tried this investment.

The aim is to induce vic­tims to reg­ister. Fraud­sters are par­tic­u­larly keen to get hold of tele­phone numbers.

Phase 2: First per­sonal contact

Once vic­tims have reg­is­tered, they will then receive a call from a broker. Usu­ally, these are met with scep­ti­cism. Such scep­ti­cism is delib­er­ately taken into account, and only a small invest­ment sum of some 250 CHF or 500 CHF is nego­ti­ated over the phone. Usu­ally, invest­ments in crypto cur­ren­cies are rec­om­mended. Cus­tomers are allowed to co-decide.

Once this small invest­ment amount has been remitted, vic­tims are given access to a fraud­u­lent website’s e-banking facility, where they will find their invest­ment. Every time they log in, their yields have increased. Vic­tims are con­vinced their deci­sion to invest was the right one. Their money how­ever has long since been lost.

Phase 3: Building trust

It looks like there is some kind of “per­sonal” care rela­tion­ship sim­ilar to that with a cus­tomer con­sul­tant. Vic­tims are now con­tacted by pur­ported bro­kers ever more often. Due to the yields achieved, cus­tomers then start to wel­come such calls. These fraud­sters have also mas­tered social engi­neering techniques.

During calls, they will delib­er­ately refrain from exerting any pres­sure. Vic­tims are also left to make their own deci­sions. Pres­sure is cre­ated by offers pur­port­edly only being avail­able for a cer­tain period of time, and options which expire soon. Pay­ments mean­while are kept in the dark until this point in time, i.e. they are not recog­nised as fraud by anyone.

It is fre­quently crypto cur­rency dealers who serve as recip­i­ents and who have already opened accounts on behalf of the vic­tims. In this, legitimisation/identification is pro­vided by vic­tims them­selves, since fraud­sters have requested this of them for passing on. The bit coin wal­lets asso­ci­ated to such cases how­ever are out­side vic­tims’ con­trol. Phys­i­cally, they belong to the fraud­sters. A reversal is impossible.

Phase 4: Addi­tional payment

In case vic­tims would like the cap­ital invested back for some reason, it slowly starts to dawn on them that they have fallen victim to a fraud. In some cases, an alleged invest­ment crash is feigned. Vic­tims begin to enter the grieving phase, some­thing the fraud­sters will then shame­lessly exploit:

  • Denial: Fraud­sters start to men­tion the char­acter of this invest­ment, which requires vic­tims to remit even more to get their money back. Since vic­tims are unable to get their money back any other way, they feel they are the weaker nego­ti­ating partner.
  • Rage/anger: Vic­tims are trans­ferred to a pur­ported supe­rior, or get called by them. This goes straight up to the pur­ported provider’s top boss, who always reas­sures vic­tims, promising them a brighter future if they invest some more money.
  • Nego­ti­ating: If none of this works, fraud­sters will sub­se­quently offer an insur­ance policy which vic­tims could have already taken out at the start of the invest­ment. To secure vic­tims’ invest­ments, they are offered to have this added retroac­tively. This money, too, is lost.
  • Depression/grief: Vic­tims are help­less and see them­selves as losers trapped in a depen­dency, having to rely on fraud­sters’ good­will. Fraud­sters are well aware of this winner’s dom­i­nance and dis­tance. Fur­ther calls and the fact that in victim’s per­cep­tion, nobody is helping them, result in the cre­ation of a sur­real sense of still being able to change some­thing about the sit­u­a­tion. Sud­denly, money can still be trans­ferred back after all. How­ever, vic­tims will have to pay bank, legal or notary charges in advance.

Phase 5: Real­ising their loss

Once they realise their loss, vic­tims get in touch with their bank and the police. Solic­i­tors are contacted...

Lessons to be learned

Any such invest­ments of your money are usu­ally risky. With the promise of high yields and com­plex sub­jects such as crypto cur­ren­cies, you should exer­cise par­tic­ular cau­tion. Fraud­sters are then usu­ally never far away.

Should you still wish to invest your money, you should obtain exten­sive infor­ma­tion before­hand and make sure you only do so from rep­utable plat­forms and providers.

Report dubious offers

If you encounter dubious offers, you can notify FINMA via their reporting form. Such reports enable FINMA to dis­cover providers who are acting ille­gally and to take them out of circulation.

You can find fur­ther prac­tical tips in the FINMA video “Pro­tec­tion against invest­ment fraud”.

“Invest­ment fraud” scam tac­tics involve attacks serving to con­vince vic­tims to par­tic­i­pate in a fake invest­ment. To this end, fraud­sters promise to achieve an (unre­al­is­ti­cally) high yield to induce their vic­tims to remit money.

It is usu­ally objects such as gold, real estate and crypto cur­rency above all which are invested in. How­ever, any money you part with always ends up straight in fraud­sters’ pockets.


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