Investment fraud caused €750 mil. in damage last year; Ten times more reported: AFM
The damage caused by investment fraud is likely ten times higher than reports show. Last year, victims reported €75 million worth of fraud to the police. The actual damage is likely closer to €750 million, the Netherlands Authority for the Financial Markets (AFM) reported.
According to the AFM, many victims don’t report investment fraud to the police because they feel embarrassed or ashamed about falling for a scam and often blame themselves.
“The sophisticated, commercial, and automated methods make everyone a potential target,” the regulator said. “The financial damage per victim is often significant, and the psychological impact - partly due to shame and repeated victimization - is significant. This makes it a crime that needs to be addressed and prioritized with greater urgency.”
The AFM collected data from all the Dutch agencies that track investment fraud - the police and judiciary, the Fraud Help Desk, the Financial Intelligence Unit, and the Dutch Association of Banks, among others - and compared it to neighboring countries. Based on this, the AFM suspects that only 7 to 10 percent of victims go to the police, bringing the actual damage caused by investment fraud to an estimated €750 million.
According to the regulator, investment fraud almost always starts online through fake ads on social media and dodgy websites. “Anyone can be affected, regardless of age or experience,” said Laura van Geest, chair of the AFM executive board.
Victims are usually older people looking to supplement their pensions, working people who want to earn more than the interest on their savings, or young people who think they can get rich quickly.
“People are slowly but surely being lured in. Even when they know they’d be better off not doing it,” Van Geest added to NOS. “All those wonderful stories make you hopeful, and at some point, perhaps even a little greedy. Then you don’t pay enough attention and fall for it. Hope and greed are a deadly combination. These scammers exploit that very skillfully.”
Van Geest expects investment fraud to rise even further in the coming years, partly because the techniques used to defraud people are becoming increasingly sophisticated and cheaper. Artificial intelligence is making it easier and easier to build genuine-looking fake websites and deepfakes of Dutch celebrities promoting investment products. Fraudsters don’t even have to be technically skilled anymore. They can buy components for their schemes on the dark web.
The AFM believes that investment fraud will become a higher priority if the reports are less fragmented. The regulator, therefore, advocates for a single reporting center. “Only intensive collaboration between public and private parties can lead to a more effective fight against this growing phenomenon with its significant financial and social impact,” Van Geest said.
