How to Identify a Nigerian Scam Investment Scheme

Every other day, a scam investment scheme launches in Nigeria.

The plan is to defraud as many gullible investors as possible before closing shop and then reinventing their scam.

As an investor looking to invest your money in Nigeria, you’ll always be at risk of these scam investment schemes.

Nowadays, it is even becoming tougher to recognize these scams due to their evolution over the years and some gap-closing techniques now employed.

A scam investment could effectively disguise as a legitimate investment company and defraud thousands of investors before anyone realizes.

So, we’ll be looking at some ways to quickly identify a Nigerian Scam investment scheme.

You could use any of these markers to differentiate a scam investment from a legitimate one.

And this is by no means an exhaustive list, since these scams could evolve to start replicating elements of a legitimate investment company. 

So, keep an eye for updates if you want to know more.

Let’s get started.

Lack of Institutional Backers

Most scam investments do not have institutional investors or backers.

Institutional investors are Venture capitalists, Trust funds, Asset managers, etc. 

These guys do a lot of due diligence before investing in or backing a company.

There is a high chance that an investment is legitimate if it has reputable institutional backers. Otherwise, you have to keep digging.

Low Industry Reputation

Most scam investments have little or no industry reputation.

They just pop up today and are gone tomorrow.

It is difficult for a scam investment to stay active for up to 5 years. I think 3 years is the maximum I’ve seen in Nigeria.

So, if an investment company has not lasted more than 5 years and has not shown any strides in their Industry, you should be careful with them.

There is no need to rush in and invest with any new hyped investment scheme. Just be patient. If they are reputable, they will survive the 5 years mark and you’ll still have the chance to invest after doing your due diligence.

Fake or Untraceable Managers

Most scam investment schemes are run by a few neverdowells with no reputation whatsoever.

So, what they do is either hire fake managers to make up their team, or they use fake names and faces gotten from a Google search.

The first question you want to ask is “who and who is in their management team?” and “what have those guys achieved that warrant you investing with them?”

If you have never come across any name on their management team or do not have a profile timeline of the managers and their previous industry experience, then they may not be worth investing in.

Fake or Untraceable Partners

In a bid to look reputable, most scam investments would cook up a fake list of companies they partner with.

Don’t fall for this.

Research the partners and see if what they do actually relates with what the investment company is into.

If possible, contact the said partner and inquire if they are really partners with the company you are about to invest in.

If the said partners are untraceable or unresponsive, then maybe you should be wary of their claims and not invest.

Paid Celebrity Endorsements

Some scam investment companies have already mastered the art of launching big and catching the eye of gullible investors.

What they do is pay one or two celebrities or popular persons to endorse their investment scheme.

Don’t fall for this.

A celebrity is not a financial advisor. They get paid for endorsing a lot of rubbish, and a scam company could buy their endorsement.

The only endorsement you need for an investment company is either from the SEC or a reputable credit rating bureau.

No Physical Office Address

These days, a few scam companies are now having physical offices or virtual office addresses.

But many scam companies still do not have a physical office address. 

They just put up a website and some social media pages, and start advertising their scams.

Before you invest with a company, get the address of the company and pay them a visit.

You could also enquire from people around to know how long the company has been in that location. If they’ve not lasted up to a year, then you should be wary.

Lots of Bogus Claims

In a bid to look reputable, most scam companies make a lot of bogus claim that only brain-dead people would believe.

You’ll hear them make bogus claims such as:

“We are into real estate, import and export, oil and gas, branding, manufacturing, etc.”

“We have several years of experience investing in…”

“We have over 20 partners in 10 different countries”

“We want to alleviate poverty in Nigeria and Africa at large.”

No investment company should be talking about alleviating poverty, since most of their investors have money to invest.

If they want to alleviate poverty, they should simply go to the inner cities and provide amenities and empowerment for people there.

These scam companies are only looking to trigger some emotions and get you to part with your money.

Don’t fall for it.

No matter the number of reviews of people claiming they’ve made X amount of thousand or million Naira, it would be wise if you do your own due diligence before parting with your hard-earned money.

Unreasonably High ROI

Apart from trying to get you emotional, most scam investment companies would try to feed your greed.

By offering an unreasonably high ROI, most gullible investors would be willing to take the risk.

You would see a new company with no traction or visible infrastructure whatsoever offering to pay a 20% monthly ROI to its investors.

If this isn’t black magic, then I don’t know what it is.

Designed with Incentive Marketing

Many scam companies today are designed with incentive marketing.

They understand that word-of-mouth is the strongest form of marketing, and would cost less too.

Also, most digital marketing platforms are increasingly becoming aggressive towards scam investment companies.

So, most scam investment companies are left with the option of using their investors as marketers.

When you invest with them, they promise to pay you a token to help them scam your family members, friends and associates.

So, you are not only risking your capital by investing with them; you are as well risking your reputation for a small commission that may not be paid.

Lack of Regulatory Compliance

Most scam investment companies shy away from regulatory compliance.

They know they would fail the required due diligence and documentation needed to comply with regulatory bodies, so they just stay away.

If you have an investment company that deals in oil & gas, then you want to know what kind of license they have and which trade body they belong to.

If they are purely into financial assets, then you want to know and verify what regulatory license they have.

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