Beware of Fraudulent Investments and How to Identify and Avoid

Fraudulent investments, often referred to in Indonesia as investasi bodong, are deceptive schemes that promise unrealistically high returns with little to no risk. These scams are often disguised as legit opportunities but are actually based on Ponzi or pyramid schemes, with no real business activity or asset behind them.

What Is a Fraudulent Investment?

A fraudulent investment is a type of financial scam that targets individuals by offering high profits in a short time—usually without any clear explanation of how the money is generated. In most cases, the business model is fake, the returns are unsustainable, and eventually, the money disappears.

How Fraudulent Investment Schemes Work

Here are the most common tactics scammers use to lure investors:

1. Too-Good-To-Be-True Promises

They offer guaranteed profits—like 10% to 30% returns per month—which are not realistic in any genuine investment.

2. No Real Product or Business

There’s usually no actual product, service, or business activity. It's just a front to collect money from unsuspecting investors.

3. Ponzi or Pyramid Scheme Structure

Instead of using money for real investments, scammers pay old investors with new investors’ money. This cycle collapses once new recruitment stops.

4. Encouraging Recruitment

You're asked to invite others and promised bonuses or commissions if they join. This tactic fuels the scam’s expansion.

5. Not Registered with Financial Authorities

Most fraudulent investment programs are not licensed or regulated by financial bodies like Indonesia’s OJK (Otoritas Jasa Keuangan).

Red Flags of Fraudulent Investments

Watch out for these warning signs:

• Promises of high returns with no risk
• Vague or missing information about how the investment works
• No proof of real business operations or company legitimacy
• Claims you can withdraw funds anytime with no conditions
• Incentives to recruit others (referral bonuses)
• No financial transparency (no clear reports or audits)
• The investment is not registered with OJK or any trusted authority

Examples of Fraudulent Investments

These scams can take many forms, including:

• Ponzi and pyramid schemes
• Fake savings circles or “arisan bodong”
• Illegitimate cooperatives or “koperasi bodong”
• Investment offers on social media promising quick wealth

How to Avoid Fraudulent Investments

Staying safe is easier when you know what to look for. Here’s how to protect yourself:

• Do your research – Don’t be swayed by flashy promises. Check the company’s background and track record.
• Verify the license – Make sure the investment is registered with OJK or your country’s financial authority.
• Understand the business model – Legitimate investments explain clearly how profits are made.
• Consult professionals – Talk to a financial advisor or regulatory body if in doubt.
• Trust your instincts – If something feels shady or too easy, it probably is.

Final Thoughts

Fraudulent investments may seem tempting, especially when they offer fast money with zero effort. But in reality, these schemes only benefit a few early participants—while the majority end up losing everything.

Stay informed, stay skeptical, and always invest wisely. And Stay tone with me in this blog, for new update.