Gold investment scams: Family, friends used as bait in ponzi schemes

KUALA LUMPUR - Gold investment scammers use tactics of leveraging existing investors as 'bait' to attract new investors among family members or friends.

According to Federal Police Commercial Crime Investigation Department (CCID) Director Datuk Seri Ramli Mohamed Yoosuf, these schemes operate like Ponzi schemes, using new investors' money to pay promised returns to existing ones.

"There's no actual gold involved. Investor deposits aren't used for gold purchases," he said.

Ramli said organisers entice new investors with unrealistic returns, building confidence and encouraging them to invest more, even involving family and friends.

However, the scheme crumbles when the pool of new investors dries up, and the organisers can't maintain payouts using "rolling money."

Ramli highlighted the increasing use of online platforms like Facebook and WhatsApp to spread the scam.

"They exploit algorithms to target victims and often steal names and images from legitimate investment companies to appear trustworthy.

"Celebrities and influencers are also impersonated to add a false sense of legitimacy," he said.

The seriousness of the problem is evident in CCID's statistics: 379 cases and RM46.3 million lost in 2023, with 88 cases and RM14.5 million lost so far in 2024.

To help you avoid becoming a victim, Ramli provides the P.E.N.I.P.U. formula to identify red flags:

1. Profitable: Unrealistic high returns in a short time.
2. Endorsement: Appealing marketing that doesn't address risks.
3. No risk: Promises of guaranteed returns without any risk.
4. Immediately: Pressure to invest quickly without time for research.
5. Payment: Requests to send money to individual or non-company accounts.
6. Unregulated: No registration or clear information about the organisation.