How Sure-shot Investment Scams Work

  • Home
  • /
  • Blog
  • /
  • How Sure-shot Investment Scams Work


sure-shotHave you received an Email or SMS similar to this: “We provide sure-shot stock market investment tips. Enjoy the free trial for 6 months. If you are satisfied, you can enrol for the premium investment tips package anytime”?

Warning: Do not fall for “sure-shot investment tips – trial package”.

Also have you wondered how anyone could provide sure-shot tips? If they know a sure-shot investment tip, why do they reveal it, instead of investing and making money for themselves?

Let’s take a look at the trade secrets behind such “sure-shot investment” schemes and why you should not fall prey to these.

Scammers’ strategy

Scammers usually pose as online stock market advisers. They somehow manage to collect email IDs/contact numbers of 100,000 contacts to begin with.

How it works

The modus operandi here is simple. They simply give tips. Say in a particular month they will predict the market will go up or down. Their clients will react and invest accordingly. There is a 50:50 probability that the market will behave according to the tip, as it will either go down or up. Therefore, it is a good practice for the scammers to inform half of their clients (say 50,000) that the market will rise, while the remaining half will be informed that it is expected to fall.

Developing satisfied clients

As the market will either rise or fall, it is going to benefit either group of 50,000 clients. The scammers then will focus on those satisfied 50,000 clients and will give another tip for the next month. These remaining 50,000 clients will then be divided in two groups and so on.

Developing very satisfied clients

Scammers then ignore the group of individuals who did not get rewarded for their investments and focus on the ones who did. The same strategy is then repeated by making two groups of 12,500 individuals each and providing them with the two opposite tips for the next month. Two groups of 6,250 each will be created then and so on. At the end of this process, scammers get clients a bit more satisfied than the previous 50,000.

Now, developing devoted clients

They will again divide this group of satisfied clients of 6,250 in to two groups of 3,125 each and repeat the exact same strategy. Again one group of 3,125 will further benefit and become very satisfied clients.

Finally, say out of the 3,125 very satisfied clients, 1,562 clients will be benefitted from the tip and will become devoted clients of the scammers.

Making merry out of devoted clients

What has happened in this process is that there are now 1,562 clients who have got 6 consecutive rewarding tips from the scammers and have made money in the process. They are likely to get greedier to earn more money now onwards. Scammers actually await this opportunity. This is a perfect time to introduce a paid version of a “sure-shot investment tips package” to these 1,562 devoted clients and sell the same to all of them for a lump-sum amount. Now on, these clients will continue to stick with the scammers till they lose a significant amount of money.

For scammers, the deal is simple: collect another 1 lakh or so contacts and repeat the same game again. Once their contact database is exhausted, they will create another investment tip website under a different brand and start giving the trail of packages to the same database.

This is how these ‘sure-shot investment’ scams are devised while scammers take advantage of clients’ greed. The clients are strategically engineered to become devoted.

Greediness and desire to make quick money are actually the weakness on which these scams are built. Don’t fall prey for these traps. Remove those weaknesses and stay financially stronger always.

About the author

Amit is an Independent Financial Advisor, based in Dubai since 1997. He is part of the prestigious ‘Million Dollar Round Table’ (MDRT), which is an elite club of the best financial advisors worldwide.

He has authored the ‘6-Step Financial Success Guide’, and the book ‘Creating, Preserving, Distributing Wealth’.

He helps business owners and professionals ‘Create A Second Income’ through investments.

Amit Mitbawkar

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}