Fraudulent investments: How to detect them in 6 steps

February 23, 2021 6 min read

This article was translated from our Spanish edition using AI technologies. Errors may exist due to this process.

In recent days, the National Banking and Securities Commission (CNBV) authorized the first platform for loans between people to operate as a Collective Funding Institution (IFC) under the Law to Regulate Financial Technology Institutions ( Fintech Law ).

With this, there are already 93 fintech companies that are in the authorization process of the CNBV, the Bank of Mexico and the Ministry of Finance and Public Credit, among them 34 collective funding platforms or crowdfunding .

“In Latin America we are very used to saving, but not to investing. Until recently it was seen as something reserved for people who had a lot of money. There has been a change in mentality mainly because there is more information on financial education in the last five years, ”commented Héctor Sosa, investor and author of the podcast Goodbye to your boss and spokesperson for the   Inversiones 2020 Forum, in an interview with Entrepreneur en Español .

The specialist pointed out that one of the investment tools that has grown the most in the region is crowdfunding because it allows you to participate with very small amounts, as well as how it is very fast and easy to open your account.

“I like crowdfunding because it democratizes access to investments, but there is a risk. As more and more people enter the investment ecosystem, many times they do so without sufficient information and even with a bit of innocence ”, says Sosa.

How to know if an investment is a fraud


Sosa, who is also the author of the books Investments: everything you need to know to start investing and Multiple sources of income: how to make money on the internet , points out before entering any investment platform you must investigate, know if it is in process regulation and adjust expectations when entering.

“You have to be aware of the tax obligations that you are going to acquire. You will likely expand your income and that will generate taxes. You have to pay attention if what you generate in returns justifies that ‘additional job’, so to speak, “says the expert. “It is important to compare before choosing an investment instrument. There are platforms, beyond collective funding, that also offer very good opportunities. The best thing is to determine which are the most appropriate options according to your profile, the risk you want to assume and the plan you have with your money ”.

Sosa offered us six keys to identify an investment that is fraudulent.

1. Offers unrealistic returns: Generally they will offer you impossible fixed interests. “They tell you ‘I’m going to pay you 10% per month’, but how is that possible if the reference rate is at 4% per year and that makes no sense. A profit of more than 50% per year is out of proportion. To measure, a yield of 20% per year in a consistent way for the Mexican Stock Exchange (BMV), – a market that is volatile, but gives good returns -, is extraordinary and very specific conditions have to be given ”.

2. They cannot explain to you how they generate value: “The people in charge of the investment or business involve them explaining the origin of the profits in semi-exotic instruments such as cryptocurrencies, cannabis, trading, etc. From the point of view of people who do not know about these tools it sounds very complex, but the reality is that they only earn with the extra money that comes in. “

3. If something sounds too good to be true, maybe it is not: “Just because an investment model is advertised on radio, television or in the press does not mean that it is legitimate and reliable. You always have to investigate. If something sounds too good, find information about it. “

4. They ask you to recruit new people: “If the business pays you for the number of people you bring, it is a pyramid scheme that is only supported by the new money that the recruits inject. Only those who are at the top of the model win. There are multilevels that are legal, but ponzi or flower of abundance scams also use that scheme a lot. “

5. They are not regulated: “If something is not monitored by the CNBV , the Bank of Mexico and the Ministry of Finance and Public Credit , or the Association of Collective Funding Platforms (Afico) if it is crowdfunding, you risk losing all your money ”.

6. It is unsustainable in the long term: “If the business cannot be replicated. You’re actually putting your ‘wool’ into something that you don’t know if you’re going to see it again. “

Whenever you want to enter into an investment, be it crowdfunding or multi-level, analyze how they work, what are their risks and benefits, as well as their tax obligations. Look for reviews on blogs, YouTube channels, specialized media, social networks and podcasts to know the experience of other users.

“We must be proud that fintech companies and crowdfunding have grown so much in Mexico. Like everything else, it has its pros and cons and its good and bad players, but this sector is here to stay, it will continue to grow and it is worth understanding how it works, “concluded the finance expert.

No Comments Yet

Leave a Reply

Your email address will not be published.


The Abundance Pub (TAP) is a media source dedicated to all things positive in the world. Focusing on Health, Wealth and Happiness. The Abundance Pub serves as repository of positive news articles, blogs, Podcasts, Masterclasses and tips to help people live their best life!


Message From Founder