A Few Simple Steps Toward not Falling Victim to an Investment Scam

Ofir Eyal Bar
4 min readJan 8, 2023

Nowadays, many of us don’t want to settle when it comes to our lifestyle. We want to go abroad for the holidays, own a car (or two), and live in a spacious home. The thing is that a 9 to 5, in many cases, isn’t enough to afford all this. That’s one of the major reasons why many people start investing as a ‘side gig’ — a way to make some more capital without too much hassle. Sadly, as we all know, there are more than a few crooks posing as “entrepreneurs” who are willing to take advantage of that. So, how can you identify a dishonest venture before you invest your capital in it?

I am Ofir Bar, an investor with about 25 years of experience in markets all around the world. We live in a reality of a constant flow of innovation, startups, and entrepreneurship — and that has many benefits. However, this also causes more and more fraudsters to try their luck getting rich by fooling hard-working people to invest their money in monkey business. For this blog post, I gathered a few tips to help you detect a fraudulent investment before you open your wallet.

Crypto investment scam
Source: Shutterstock

Sharpen your market research technique

When looking for an investment with potential, the most instinctive thing we do is go online and check the first three Google results or so. I can’t deny that online market research is a powerful tool, but it also has some clear disadvantages: One of these is that it’s extremely difficult to tell the difference between biased and unbiased information — and there’s A LOT of biased information out there. Therefore, your market research should start differently.

Instead of looking for information about a business offer, first learn about the people behind it. Dig deep to actually understand what the business does, the nature of its product(s), and its business model. Look for its financial statements to see if there’s anything fishy hiding between the lines. Were any of the owners or executives of this company involved in some illegal activities in the past? Do some of their past clients complain about being conned? If a salesperson contacted you to invest in a startup, check whether they, or the company they work for, have had any issues with regulators or past investors.

When conducting ‘ordinary’ market research, it’s best to ignore any press releases, promotional emails, and other promotional content. Any of these should not be a factor in your decision to either invest in the company or not. Can’t find up-to-date financial information about the company from independent sources? Is it glorified for no visible reason? These are major warning signs.

Dishonest company conduct
Source: Shutterstock

Not all client complaints are reliable

Naturally, all investments enroll some sort of risk, but not all investors understand this, since they don’t really bother reading the terms, conditions, and risks that come with the investment before they dive in. In many cases, sadly, this leads them to wrongfully ‘shame’ the business they invested with (or in), and call it a scam, even if that’s not the case. So, even past investors’ reviews should be taken with a grain of salt. However, if those angry reviews contain some of the complaints listed below, you should definitely be suspicious:

  • Investors complain that the business promised eye-popping profits or returns with little or no risk of loss. Remember — if it sounds too good to be true, it probably is.
  • Investors complain that the business refused to acknowledge losses, especially if the losing investment was recommended by the company itself. Once the company lost, it changed the goalposts to a certain time in the future, promising even higher profits.
  • People complain that the company was foot-dragging when they asked to withdraw their gains. This may be a sign for the company misusing investors’ funds.
  • People claim they were pressured or manipulated into investing. A salesperson basing their pitch on the FOMO (fear of missing out) effect — should definitely raise a red flag. A common scamming technique is to tell investors to invest NOW, before the ‘amazing’ window of opportunity closes. Remember, never hop on financial endeavors before you fully understand what you are getting yourself into.
Frauding investors
Source: Shutterstock

Challenges of the internet era

It’s awfully easy to spread lies (or distorted truths, which can also be referred to as lies) in the internet age. That’s no secret. This requires us to be on the lookout much more than we were before. If you ask me, the fact that distorted truths are so widespread these days also has a distinct advantage: It helps us grow to be much wiser consumers, and to consider our financial activities carefully. Of course, not all of us are equally aware of the challenges the internet era presents us with. Hopefully, as time goes by, everyone will learn to safely navigate their financial activities without falling victim to scams.

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Ofir Eyal Bar

A successful businessman, digital marketing entrepreneur and Real Estate investor.