By Dr. Pooyan Ghamari, Swiss Economist and Visionary
You can listen to the Spotify Podcast on this topic.
In an era where mobile apps and online platforms have revolutionized the way we interact with technology, finance, and investment, many people have found themselves turning to new, easy-to-use apps that promise quick and substantial returns. These platforms, often advertised on social media and through targeted ads, claim to make investing accessible to everyone, regardless of financial background or expertise. However, behind some of these seemingly harmless apps lurks an unfortunate reality—deception.
One of the most recent and highly publicized scams involves an app that promised users an alluring 20% return on their investments. At first glance, such returns seem too good to be true, but the app’s sleek design, user-friendly interface, and persuasive advertising lured in thousands of unsuspecting investors. Unfortunately, like many similar schemes before it, the app was not what it seemed. It was a scam designed to take advantage of those seeking high returns with little effort. In this article, we will explore how this particular app operated, how it convinced investors to trust it, and the steps you can take to protect yourself from falling victim to similar scams in the future.
The Allure of Quick Returns
The promise of easy money is one of the most potent psychological drivers of scams. People are naturally attracted to opportunities that seem to require minimal effort while offering high rewards. In the case of this fraudulent app, the promise of a 20% return on investments seemed almost irresistible, especially in a world where returns on traditional investments, such as savings accounts and stock markets, can often seem underwhelming.
Apps like these often prey on human psychology—creating a sense of urgency and excitement around the promise of making money quickly. By offering returns far higher than most investment options, these apps tap into the growing trend of “get rich quick” schemes. For many individuals, especially those with limited experience in investment, the allure of such returns is simply too good to ignore.
The Marketing Machine Behind the Scam
A key factor in the success of the scam was the app’s sophisticated marketing strategy. The app utilized social media platforms like Instagram, Facebook, and YouTube to create an air of legitimacy. Influencers with large followings were recruited to promote the app, showcasing their own purported gains from using it. These influencers, many of whom had no formal background in finance, often used their platforms to further the narrative that anyone could earn big with minimal effort.
The app’s advertisements were highly polished, with professional-looking websites and slick promotional videos that made it appear as though it was a legitimate investment platform. Potential investors were offered a seamless experience from the moment they downloaded the app. The onboarding process was simple and painless, requiring only basic personal information. Once signed up, users were shown their “investment dashboard”—a clean and organized interface that made their portfolio seem like it was actively growing.
How the Scam Worked
At its core, this app was a Ponzi scheme—a fraudulent investment operation where returns to earlier investors are paid using the capital of newer investors, rather than from profits generated by actual investments. These types of schemes are unsustainable and eventually collapse when the number of new investors starts to dwindle, leaving many individuals with significant financial losses.
The app promised 20% returns on investments, but the truth was far different. In reality, the returns were fabricated, and users were not actually investing their money in any viable financial markets. Instead, the app’s operators were simply collecting funds from new investors and using those funds to pay out fake returns to earlier investors. As long as new users kept signing up and depositing money, the scheme could continue to function—at least for a while.
However, as is often the case with such scams, the app eventually reached a breaking point. The operators either disappeared with the funds, or the app simply stopped functioning, locking users out of their accounts and cutting off access to their invested money.
The Consequences for Investors
For many of the individuals who invested in the app, the aftermath was devastating. Not only did they lose the money they had deposited, but they were also left feeling betrayed by a system they had believed to be legitimate. The emotional toll of being scammed can be just as significant as the financial loss, as many victims experience feelings of guilt, shame, and distrust.
While the app promised lucrative returns, the reality was that most of the people who invested lost everything. Some had put in small amounts, hoping to test the waters of investment, while others, drawn by the promise of higher returns, invested large sums of money. The scam’s operators, however, walked away with millions, leaving their victims with nothing but disappointment.
Red Flags to Look Out For
One of the most important lessons from this scam is the importance of being vigilant and cautious when it comes to investment opportunities, especially those that seem to promise unrealistically high returns. There are several red flags that potential investors should always be aware of:
- Unrealistic Returns: If an app promises returns that are significantly higher than what is offered by legitimate investment platforms (such as 20% or more), it is likely a scam. High returns often come with high risks, and such schemes usually do not last.
- Pressure Tactics: Many scams use high-pressure tactics to rush individuals into making decisions. If you are being pressured to invest quickly or if you are told that the opportunity is “time-sensitive,” this is a red flag.
- Lack of Transparency: Legitimate investment platforms are typically transparent about their business operations, risk levels, and fees. If an app refuses to provide detailed information about how it works or what happens to your money, it’s a cause for concern.
- Unregulated Platform: Always check if an investment platform is regulated by a reputable financial authority. Unregulated apps and platforms are often operating outside the law and are more likely to be scams.
- Celebrity Endorsements: While many legitimate companies use endorsements from well-known personalities, a scam may use fake or exaggerated endorsements to add credibility to their scheme. If the influencer’s investment success seems too good to be true, it probably is.
Lessons Learned and How to Protect Yourself
The rise of online scams, especially in the investment world, highlights the importance of due diligence and careful research before trusting any platform with your hard-earned money. Here are some steps that can help you avoid falling for similar scams:
- Do Your Research: Always research the platform thoroughly before investing. Look for reviews, ratings, and feedback from other users. If the platform has been involved in any scams or legal issues in the past, it will likely show up in search results.
- Consult a Financial Advisor: If you are new to investing, it’s always a good idea to seek advice from a professional financial advisor. They can guide you on safe and legitimate investment options based on your goals and risk tolerance.
- Understand the Risks: All investments carry risks. Be wary of any platform that downplays or ignores the risks involved. Legitimate platforms will explain the risks of investing and will not promise guaranteed returns.
- Use Regulated Platforms: Ensure that the platform is regulated by a financial authority in your country. Regulatory bodies help ensure that the platform adheres to industry standards and that investors are protected.
- Trust Your Instincts: If something feels off or too good to be true, trust your instincts and walk away. Scams often prey on people’s desire for quick financial gain, and it’s important to stay skeptical when promises of large returns are involved.
The promise of 20% returns from this fraudulent app may have seemed enticing at first, but for those who fell victim to the scam, the aftermath has been both financially and emotionally devastating. The app’s smooth marketing, fake returns, and slick user interface led many to believe they were part of a legitimate investment opportunity, but in the end, it was a classic example of a Ponzi scheme designed to exploit the greed and hopes of everyday people.
As digital finance continues to evolve, it is crucial to remain cautious and discerning when considering investment opportunities. The lessons learned from this app’s scam serve as a stark reminder that, in the world of investing, if something seems too good to be true, it probably is. Protecting your finances starts with awareness, due diligence, and a healthy dose of skepticism.
Dr. Pooyan Ghamari, Swiss Economist and Visionary, remains dedicated to educating individuals on the importance of financial literacy and the critical need to protect oneself from fraudulent schemes.
