The characteristics of fraudulent investments need to be known by anyone who wants to maintain and grow their finances through investment. The proliferation of investment offers promising large profits in a short period of time often leads people to become complacent and fall victim to fraud.

Instead of making a profit, the capital invested can disappear without a trace. Amidst the growing trend of financial literacy, cases of fraudulent investments are becoming more frequent. Many parties pose as legitimate companies, complete with professional websites and social media accounts.

Therefore, recognizing the characteristics of fraudulent investments is no longer an option but a necessity that you must know if you wish to enter the world of investing, so you do not fall into the dangerous trap of sweet promises.

Characteristics of Illegal Investments

1. Offering Unreasonable Returns

One of the most common characteristics of illegal investments is the offer of very high returns in a short period of time. For example, promises of 30 percent profits in two weeks or even doubling your capital in a month. In reality, no legal and healthy investment can guarantee such returns.

Legitimate investments always involve risks and fluctuations in line with market conditions. When an investment product promises huge profits without any risk, you should be suspicious. Fraudulent investment operators know exactly how to manipulate the psychology of potential victims with bombastic phrases like “instant profits,” “no losses,” or “guaranteed profits.”

The key to avoiding being scammed is to always question the logic behind every offer. Compare it with market data and examine how the profit scheme is explained. If it seems too good to be true and lacks transparency, it is likely a characteristic of a fraudulent investment.

2. Lack of Official Legitimacy

One of the characteristics of fraudulent investments is the absence of clear information regarding licensing, office addresses, or who manages the business.

In addition, the transaction process in fraudulent investments is usually not transparent. The funds you deposit may go into a personal account, not a company account. Financial reports, asset prices, and profit mechanisms are also not disclosed in detail.

Verifying legal status can be the first step in protecting yourself from losses. Do not hesitate to request official documents or search the company’s name on the regulator’s website. If they refuse to provide such information, you are dealing with one of the characteristics of a fraudulent investment.

Read also: Here are 6 Ways to Maintain Consistent Gold Investment Without Burden – Treasury

3. Focus on Recruiting New Members

Investments should focus on asset or portfolio performance, not the number of people recruited. If a scheme requires you to recruit new members in order to earn profits, then it is close to a Ponzi scheme or pyramid scheme. This is one of the most dangerous characteristics of fraudulent investments.

Such schemes survive by using funds from new members to pay existing members. When no new members are recruited, the cash flow stops, and the system collapses. Thousands of people can lose their money simultaneously.

Typically, the operators will offer large referral bonuses to encourage you to spread the scheme to others. This not only harms you but also risks dragging your loved ones into it.

Therefore, if you encounter a system focused on recruiting members, you should be suspicious, as this is one of the hallmarks of a fraudulent investment.

4. Unable to Withdraw Funds at Any Time

Legal investments usually allow investors to withdraw their funds in accordance with the agreed terms. However, in many cases, characteristics of fraudulent investments include difficulty in withdrawing funds or a lack of clarity regarding when funds can be withdrawn. In fact, some perpetrators delay withdrawals using various technical excuses.

They may say that the system is being repaired, or that the withdrawal process takes longer than usual. Meanwhile, there is no guarantee of when the funds will be returned. This situation often leaves investors confused and ultimately loses all their funds.

This is clearly different from professional investment platforms, where the withdrawal process is clearly defined and transparent in the terms and conditions. If you are having difficulty withdrawing your funds without a logical reason, you may have fallen into the trap of fraudulent investment characteristics.

5. No Real Products or Unclear Assets

In a healthy investment, you know where your money is allocated, whether it is for the purchase of gold, stocks, or property. One of the characteristics of a fraudulent investment is the lack of clarity regarding the products purchased or managed by the service provider.

Often, fraudulent investment operators only sell “promises of profit” without specifying the form of assets or the business being operated. They may use foreign or technical terms to confuse potential investors so they don’t ask too many questions.

If you cannot determine exactly where your money is being placed or what assets are being held, be cautious. This lack of clarity is a strong indicator that you are dealing with one of the characteristics of a fraudulent investment.

Investing is an important step toward building a secure financial future. However, before diving in, make sure you are not just tempted by sweet promises, but also understand the risks and mechanisms involved in investing. Recognizing the characteristics of fraudulent investments can be the first step in avoiding significant losses.

If you’re a beginner looking to enter the world of investing, consider trying digital gold investments through Treasury. Digital gold investments are ideal for beginners because they require a small initial investment and transactions can be easily conducted via an app. Plus, gold prices tend to rise over the long term and are inflation-resistant.

Through the Treasury app, you can start investing in digital gold with as little as Rp5,000. Treasury is officially registered with BAPPEBTI, KOMDIGI, ICH, and is a member of ICDX, ensuring your transactions are safe and reliable.