Financial and investment fraud is a serious menace to innocent people looking to preserve, protect, and grow their wealth. While all investment has some inherent risk, and any asset management firm would tell you to diversify your holdings, financial exploitation is not part of the normal fluctuation of the market. Instead, it is a criminal act intended to deceive honest people out of the wealth they have earned.
At Stratford Management in Tokyo, Japan, we look out for our clients’ well-being and financial prosperity. To aid in that endeavor, we provide the following tips for avoiding financial and investment fraud. Anyone interested in wealth management services or financial advice should contact our Tokyo office.
How to Avoid Common Scams
Risk management is difficult enough when you only have market shifts to worry about. Unfortunately, there are people in the world who make it their business to add more peril and danger. However, these tips can serve as helpful tools to assist you in avoiding such crimes.
Find a Trustworthy Team
According to research into fraud and financial schemes, one of the best ways to avoid falling prey to these situations is by having a social support system. Isolation is often a trait that is taken advantage of by con artists. There is a common aversion to discussing financial particulars with friends and family, but it can be important to get others’ input on potential investment opportunities before making an erroneous decision. Whereas one person alone is susceptible to falling for financial crimes, a team of people can raise questions that throw the scam under the microscope.
Stick to Bank and Card Payments
Wire transfers often do not have much in the way of fraud protection. Once you send your money to an individual, it is difficult to get it back. On the other hand, banking institutions and credit card companies tend to have built-in protections against scams and fraud.
If a potential opportunity requires you to send a wire transfer or other dubious means of providing funds, that should be a significant red flag.
In some cases, conmen pose as authority figures such as upper management, law enforcement, or even government officials. They may make a potential target nervous about disobeying, leading the person to supply the criminal with personal information that can be used to wreak financial havoc. Never give away information such as:
- account passwords
- government identification numbers
- PINs to bank accounts
Take Your Time
Yes, sometimes market opportunities have deadlines. Stocks, dividends, bonds, and other products do not necessarily remain at the same value for long. However, any opportunity that stresses its own fleeting nature should be looked at askance. It likely is using a technique called the Fear of Missing Out (FOMO) to seduce potential targets into making a bad decision.
As humans, we are psychologically averse to loss and risk. In many cases, the idea of missing out on an opportunity can be so overwhelming that we jump into an untrustworthy situation so that we “at least” won’t regret not taking the chance.
All financial transactions and decisions should be made with proper forethought and research. If the person offering you the opportunity insists on immediate decisions, you should run the other direction as quickly as possible.
Realize You Do Not Have to Reciprocate
Finally, remember that fraudsters often try to use a principle of reciprocation to guilt you into purchasing their faulty product or making a bad business decision. For example, you may get a free lunch or free subscription, or they might make an offer to provide you with additional services. Their hope is that this will make you feel indebted, even subconsciously, and you will “pay them back” by making the action they desire (investing, purchasing, sending money, etc.).
You do not owe anyone your money. Even if they provide free services at first, this does not mean that you should automatically decide in their favor. Beware of subtle guilt-tripping like this, as it is used precisely because it is an effective psychological tactic.
For additional insight into risk management, wealth management, and financial protection, speak to the team at Stratford Management in Tokyo, Japan.