Haven't you heard about phone scams? If you haven't, you are the exception rather than the rule. It is worth taking a closer look at the matter, especially as scammers tend to switch scenarios, i.e. instead of shocking dramatic situations about the loved ones getting into accidents, they lure victims with supposedly very lucrative investment opportunities.
A couple of years ago, calls from unknown numbers were spreading rapidly throughout Lithuania: a lively voice, often in Russian, offering to "invest" in gold, oil or cryptocurrencies, referring to a favourable economic situation and the potential of various "financial instruments". One day, Viktoras, a salesman in Vilnius, received such a call.
It started with a friendly call
Working in a hardware store, he interacts with many people every day. The confident tone of the new interlocutor left no doubt: he seemed to be a true expert in his field. The investment broker, who introduced himself as Sergey, said he was representing a solid company - a name Viktoras had never heard of, but which sounded typical of the financial sector.
The broker explained that he had a profitable investment offer and suggested to continue the business communication via Skype or another chat application to facilitate supplementation of the information with analytical data. Viktoras was interested.
On the same evening, during a chat application call, Sergey's colleague shared a screen and showed the virtual environment their company allegedly used to track their investments and their growth. The colourful graphs and charts looked clear and informative.
To create a "personal investment account", the brokers offered Viktoras to download their recommended software programme online. He, suspecting nothing bad, did what he was asked to. The broker advised to start with a small amount of €200 to be deposited in the account he had specified and see how the return would grow - he said that due to the situation in the markets it was the best time for the investment, and that the offer would no longer be valid the next day.
Threatened with a fine
The next evening, when he logged into the system, Viktoras could not believe his eyes: his investment had already grown to €800! "Unreal," he thought to himself. "This way I can quickly save up not only for a holiday, but also for an apartment." During the second consultation, the broker was delighted with Viktoras's success. Viktoras, however, was not in a hurry to make any further investments, preferring to watch his existing ones grow. Yet, the expert assured that Viktoras was doing well because of a very good situation in the market, which was not always as favourable. The broker claimed that it was necessary to take advantage of the momentum and increase the amount at least twice. After some thought, Viktoras transferred some of his savings - €300 - to the specified account.
As the days went by, the investment was growing. After Viktoras had transferred €500, a week later the colour charts showed the amount supposedly increased to €2,000. Still unable to believe his luck, he asked his broker whether he could get his money back. The consultant politely explained that in such a case he could only withdraw the amount he had invested, i.e. €500. The next day, the amount was in Viktoras's account. It all seemed very logical and Viktoras felt much calmer.
He transferred the amount he had recovered back to the investment platform and doubled the amount by emptying his holiday savings account. The broker, however, still was not satisfied with the amount and kept encouraging Viktoras to look for additional "sources of funds": Viktoras's friends could probably lend him some money or he could ask for a loan from a financial institution. Thus, Viktoras told a friend about his new hobby. The friend was not very enthusiastic and advised him to withdraw the money, as he had heard of this type of scam.
The broker, on his part, was getting more and more impatient, and would send messages every day, urging Viktoras to replenish his investment portfolio and claiming that he would be sorry to miss the obvious opportunities to get rich. He would call via an app and offer the possibilities, supposedly available only for one day, to significantly grow the investment. When Viktoras said he only wanted to work with the existing funds, the broker did not back off. Viktoras started getting irritated with such communication, he was questioning himself as to whether a solid investment expert would behave this way.
A couple of weeks later, when the amount on the charts reached €7,000, Viktoras asked if he could get back the money he had invested and earned. The broker stated that in case of withdrawing from the platform, fees would be imposed. Taking into account the company's potential losses, Viktoras's debt to the company would amount to €10 000. The newly minted investor got scared of the idea and contacted his bank. When he told them about the situation and specified the name of the company, he realised that he had been deceived; the professionals explained that such cases were quite common.
Viktoras could only console himself with the thought that he had not borrowed extra money for his new hobby. It turned out that the bank account to which Viktoras had transferred the money did not belong to any investment company, but to a private individual. Viktoras addressed law enforcement institutions. The investigation is ongoing. Viktoras hopes to get his money back, but he needs to start saving again for his holiday.
The cheese in the mousetrap
According to Eivilė Čipkutė, President of the Association of Lithuanian Banks, the methods used by investment scammers combine technology and psychological manipulation. The downloadable programmes they offer are often designed to connect remotely to another computer, which allows confidential login details to be misappropriated. There are cases where criminals persuade the victim to log in to an online banking account to "assess the financial situation together", but actually they perform money transfers.
By starting with an offer to "invest" €200-300, the scammers rush their victims to act, claiming that the offer will supposedly expire tomorrow. To prove that the risk is low and that recovering the money in the "account" is easy, they even transfer some of the already "invested" funds back to the person's bank account, as it has happened to Viktoras. The experts state that such repayment may have such a significant impact that the victim ends up believing that he or she is "investing" and does not want to hear any arguments from the bank staff or police officers. Moreover, the scammers often warn their victims in advance that such officers may indeed enquire about any suspicious transfers.
Upon establishing a regular and close relationship with the victim, the scammers encourage the victims not only to "invest" all the funds they have, but also to borrow money from friends and credit institutions. Accounts of the scammers based in foreign countries are usually replenished by international transfers made by the victims themselves, which may also include misappropriation of payment card details.
When the victim wants to get back the "investment portfolio", which, according to the colourful account, is swelling before the eyes, the scammers demand to pay some additional fees. The saddest scenario: once the victim has completely emptied one's personal account and depleted all the borrowing reserves, the calls stop and the "investment account" is no longer available.
In most cases, the chances of finding the culprits, who work remotely and take full advantage of virtual space for evil purposes, are also very slim. Victims may be scammed for the second time: a few weeks later, they receive another call, the callers present themselves as representatives of the "authorities" supposedly investigating the scam network, and promise a chance to get the money back - all the victims have to do is pay some fee. Thus, trusting people may suffer for the second time.
Expert's comment: "You need to learn to say "stop" to yourself"
Audrius Šilgalis, Head of Investment Services and Undertakings Supervision Division at the Bank of Lithuania
Serious companies engaged in provision of investment services will never offer high returns without any risk. This never happens, therefore it would be logical to end the conversation upon hearing such words - you cannot invest without any consideration. When you hear a tempting offer, you need to say "stop" to yourself. Remember, it is your money, and if you transfer it to someone recklessly, you may not get it back, especially if the money travels to jurisdictions such as Vanuatu, the Virgin Islands or the Cayman Islands.
You do not know the people offering to invest, you do not know anything about them, and nice words mean absolutely nothing - neither their expertise nor their knowledge. If the nice-speaking guys cannot produce any certificates or authorisations, that is a red flag.
In general, a conversation with an investment company should start with the question of what jurisdiction they are in, who supervises them and whether they have the right to provide services in Lithuania. If they are unable to answer this question or try to get away by telling that such services do not require any supervision, end the call immediately and block them.
The case presented here is typical, and it is very important that Viktoras has resisted offers to borrow for investment and addressed police, because there are sadder cases where people lose their savings and are left with a pile of debts.
If you're really interested in an investment offer, all you need to do is search the Internet for reviews. Investment services (with some exceptions) are supervised in Lithuania and companies must obtain authorisations or licences to provide them. A list of such companies is available on the Bank of Lithuania's website lb.lt. We also publish a blacklist of the companies that are not allowed to provide financial services, yet they do, as well as a list of blocked scam websites.
Investor protection is essentially harmonised across the European Union. According to legislation, investment companies must select or may offer the investment solutions and instruments that suit the person's investment knowledge (beginner, advanced or professional investor), needs and experience, they must indicate the total cost of the investment, etc. If all you hear in an investment proposal are arcane terms and abstractions, it is not worth getting involved.