As scams become more sophisticated, what can we do as basics?

'We lost Dh39 million': Dubai expat reveals BlueChip owner used another firm to scam investors

https://www.khaleejtimes.com/uae/we-lost-dh39-million-dubai-expat-reveals-bluechip-owner-used-another-firm-to-scam-investors

My heart sank once again as I read this headline, just like the numerous other times when I have seen such headlines, people being scammed of their hard-earned money, their life-long savings, their pension. We live in a world which is sometimes too harsh and unforgiving.

Over the years, I have almost fallen to scams, the best one being when I just come to Dubai and I got a call saying I had won AED50,000 (USD13,600) through a raffle of the new mobile sim-cards registered in Dubai. The scammers even told me to check the serial number on the sim card to verify, yet it was a generic number on all Etisalat sim cards at that time.

The instructions were very simple, go to the nearest carrefour shop and buy gift cards worthy AED5,000 (USD1,360), scratch them and give the caller the numbers on the cards for me to redeem my prize. I almost fell for it! Excited as I was, I jumped on the metro to go to the nearest mall to buy the gift cards and promised to call back once I had the gift cards and hung up.

After hanging up, the sixth sense pushed me to call the Etisalat hotline to verify the authenticity of the call, and to my surprise, I was one of the many individuals who had been a target of this scam. I was so disappointed in myself; I am a banker for goodness’s sake! how could I have almost fallen for this? But the reality is, these scammers have become so sophisticated, and we are all susceptible to their trickery.

The abovementioned scam is way more sophisticated, way more professional and way too difficult to spot. But there are a few points we can learn from this and which we can apply in trying to verify the authenticity of what is in front of us, and I will share a few.

1.     The proverbial smell test:

This is defined as an informal method for determining whether something is authentic, credible, or ethical, by using one's common sense or sense of propriety. When something just feels too good to be true, it probably is not. An investment option that promises you a very good return with no real fundamental underneath it would not pass the smell test.

In the above example, the company was offering a 3% monthly return on an investment locked in for 18 months with minimal to no risk top banks in the UAE are offering deposit rates of between 4 and 5% per annum. A 3% per month return with a promise of minimal to no risk is too good to be true.

2.     Know the referee:

Every industry has a regulator, and entities are given licenses to operate within certain parameters and there are rules which govern these entities. While you may not need to know every single detail of the rules of the game, at least know the regulator or the referee. That check is important. A company which is well constituted will make sure that the name of their licensing authority and regulator is visible, as it adds credibility.

BlueChip was not licensed by the Securities and Commodities Authority (SCA), the federal financial regulatory agency in the UAE. Further, the entity was not incorporated in the financial centre authority, which meant the Free Zone Authority did not have oversight of this entity.

3.     Ambiance and location

The entity was operating in the not so upmarket area in Dubai. For an entity boasting of managing a portfolio of near USD700 million in Assets Under Management, an office space with a few desks would have been a red flag. Why keep such a flourishing operation low key especially when competitors are scurrying for space in the much in demand Dubai International Financial Centre.

Operating in a less glamorous location also means less visibility and less scrutiny from either potential clients or authorities. Being in premium locations means there are additional checks done by the governors of the location where one is domiciled, more security around visitors and movements and enhanced monitoring and control. These are areas to avoid for scammers which is why they will choose to operate from the less prominent places.

4.     What is the contact mode?

We do live in a digital world, and several companies have started outsourcing contact centres and support staff. However, going on the website of such a “big” company and seeing only one contact number, which is a mobile number seems odd. Add that to the location check and you start seeing a pattern. Once the mobile phone is off, your contact point with the company is off.

Equally the same, the email address for the entity just that one email address info@... 

For a company handling that size of a portfolio, a clear contact point plus escalation routes would have been mapped, to ensure that there is a clear intent to have open communication lines.

5.     Who are the people you are dealing with?

Going through the website of BlueChip group, I could see that the entity had over 100 team members, numerous articles and images uploaded, but there is no mention of names, except the names of promoters or actors who associated with the company. Even a google search to see who the management team are yielded no result. If There was no mention of the CEO’s name in the news articles, it would have been very difficult to know who was behind the company.  

6.     Read the fine print:

What is that old expression? “If you want to hide something from a black person, put it in a book.” (or some say, "write it down"). I am generalising here as I have not seen any paperwork for the above entity, but most scams take advantage of using multi-page contract documents, layered with conflicting and meaningless clauses, which have not been legally verified and in turn are non-enforceable at law.

As you are looking to part with your hard-earned money, with your life savings, do also consider looking at having a lawyer or a legal practitioner review the paperwork before you sign. At a minimum, ask around, obtain other views on the documents, on the company, on the team.

While this is not an exhaustive list of what one can do, the encouragement is to be vigilant, to look out for the warning signs, and to guard your finances diligently. I will leave you with one quote from Adam Smith, the renowned economist, “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.”

Ask yourself, why are they being so generous? What is the catch? What are they gaining from it?

Rungano