Smart Investor Malaysia


RM5.2 Billion Lost To Scams In Malaysia Over Two Years


We read about individuals losing money to scams in Malaysia almost on a daily basis. The losses are staggering, and even though the warning signs are all around us, the number of victims keep piling up. According to the Inspector-General of Police, Tan Sri Acryl Sani Abdullah Sani, there were 71,833 fraud cases recorded since 2020 until May 2022, with a loss amounting to RM5.2 billion.

The most prevalent financial scams in Malaysia as revealed by the Royal Malaysia Police (RMP) are:

  • Bank / Government Impersonation
  • Illegal Loans
  • Money Mules / Account / ATM
  • Card Rental
  • Investment Scams
  • E-Commerce Scams
  • Romance Scams

Since we want to become a smart investor, we will be taking a closer look at investment scams, with the hope that we are able to identify them and take the necessary actions to avoid becoming a victim.

Common Types Of Investment Scams In Malaysia

1. Get Rich Quick on Social Media Platforms

Usually, the scammer will ask for a small investment with a promise of very hight returns. For example, 100% return in three hours or RM1,000 in 30 minutes. Since the initial ‘investment’ is small, investors would have no problem giving away the money to start.

Once we see the gains in our account, we will be tempted to put in more money. And when the time to cash out the gains or to take out the capital, normally the scammer will ask us to pay certain fees. By the time we realise that we have been scammed, the damage had already been done.

2. Clone Firm Scams

Another famous scam that is going around is done where scammers use legitimate investment firms, but misuse their name and logo to dupe victims. It looks so real that you can’t easily tell them apart.

For example, the real business is Smart Investor, but the clone uses the name Smart Investment. It even uses the same logo, so you will genuinely
mistake it for the real deal.

The Modus Operandi Of Scams In Malaysia

Operators of illegal internet investment schemes lure unsuspecting victims to make online investments or receive investment advice online, by offering investment opportunities with unusually high returns with zero or very low risk.

When questioned about their legitimacy, most scammers operators will claim to be foreign operators that do not require licensing from Malaysian regulators to operate their business.

In truth, these operators have no legitimacy whatsoever; they are not licensed to receive deposits by Bank Negara Malaysia or licensed to offer investment advice from the Securities Commission (SC) related to fund management, securities and futures.

Unsuspecting victims would then be enticed as scammers will pay them the high returns during the initial stage, and this is used as a tactic to lure and recruit new investors. The survival of this scheme actually depends on new depositors.

The funds obtained from new depositors will be used to pay dividends to the existing depositors. Therefore, the scheme will fail when there is no contribution of funds from new depositors.

However, the scam operator will eventually abscond deposits collected when they feel that the scheme is about to fail, thus leaving the depositors at the losing end.

With So Many Legitimate Investment Schemes, Why Do People Still Fall For Scams In Malaysia?

“Scammers employ various means to manipulate their victims including promising high-returns, illusion of safety and inducing fear-of-missing-out (FOMO),” said Bryan Zeng, CEO of FA Advisory, a financial planning service provider.

Bryan Zeng, CEO of FA Advisory

On the other hand, legitimate investment schemes are highly regulated with clear guidelines on what is permissible or not. These guidelines are designed to protect the investors but may make the legitimate investment appear as less attractive.

But then again, the promise of getting rich quick in these situations is hard to resist. Scammers will promise crazily high returns in a very short time, which makes no sense once you think about it. But at the spur of the moment, we feel that it is too good to pass on such an opportunity – and we tend to make decisions based on our emotions.

As emotional beings, we are often easily manipulated when we are at our most vulnerable, which makes us easy prey for scammers. When we are not able to think clearly, that is when we make ill-informed decisions that will come back to haunt us.

Always remember the old adage: “If something is too good to be true, it is most likely a lie.”

Hence, a healthy dose of scepticism, emotional restrain, and critical thinking can go a long way. You can also check with the relevant authorities before investing or depositing money into someone else’s bank account.

Some useful links:

Those are just some of the facts that you should know about the scams in Malaysia, hope we are well-educated enough to detect and avoid it.

Make sure you also read:

With knowledge, we can actually avoid from becoming a victim of scams in Malaysia.

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