Hong Kong experiencing boom in investment scams, with cases more than tripling, losses increasing 20-fold

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Hong Kong is experiencing an explosion in investment scams, with the number of cases more than tripling in the first seven months of 2021, and the amount of money stolen increasing nearly 20-fold, according to police statistics.

Between January and July, police received reports of 725 investment scams resulting in some HK$2.5 billion (US$321 million) in losses, including a single case in which a victim was duped out of HK$9 million. By comparison, there were just 198 cases in the same period last year, with scammers making off with a total of HK$128 million.

This year also marked the first time fraudsters stole non-fungible tokens, or NFTs – “one-of-a-kind” digital assets such as art and collectibles stored using blockchain technology – from buyers via phishing scams.

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Police attributed the sharp uptick, in part, to the pandemic, which saw Hongkongers spending more time at home, which in turn gave them increased opportunities to meet people online, and scammers more chances to find victims.

“Scammers will use social media to get close to their victims and promote ‘high return, low risk’ online investment products, but many of these products don’t actually exist,” said Ngan Hoi-ian, chief inspector at the police force’s commercial crime bureau.

The phoney investment products could take the form of cryptocurrencies, overseas properties, and foreign currency exchanges, among other things, Ngan said, adding that scammers approached their victims on a variety of platforms, including Facebook, Instagram and even the professional networking site LinkedIn.

“Often the scammers combine investment scams with cyber romance scams, which can be said to steal both residents’ money and hearts,” she added.

Nearly half, or 345, of the investment scams in the first seven months of this year were also romance cons, with victims ranging in age from 17 to 70. The most money lost by a single victim, a piano teacher, was more than HK$9 million.

Some of the investment scams seen this year were so-called pump and dump stock swindles. Photo: EPA-EFE
Some of the investment scams seen this year were so-called pump and dump stock swindles. Photo: EPA-EFE

The piano teacher was targeted by a scammer on social media and entered into a “relationship” with the fraudster, who convinced her to put her money into a fake foreign exchange trading platform. She reported the case to police after about four months, when she was asked to put more money into the fake account after requesting to withdraw her investments.

Con artists are known to steal images of attractive people and pass themselves off on social media as high-flying success stories to attract targets and convince them to enter into romantic relationships, Ngan said.

After the scammers used romance to set the hook, then came the pitch for victims to put their money into fake investment products, often accomplished by sending links to fake websites or mobile apps with names similar to legitimate financial institutions, police said.

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“These applications can’t be downloaded from official app stores such as the ones owned by Apple or Google, and residents usually need an invitation code to be able to access the apps and websites,” said Ip Cheuk-yu, a chief inspector at the cyber security and technology crime bureau.

The apps would often show fake investment growth, leading victims to believe they had made gains and convincing them to put even more money into the scammers’ pockets.

Ip warned residents that if they were unable to easily find the supposed investment platforms through a Google search, they were probably fake. Another telltale sign was being asked to deposit money into personal bank accounts, which real investment agents would never request.

He also reminded residents buying NFTs, some of which have sold for millions at auction in recent months, to beware of phishing scams that could see them lose their digital assets.

NFTs are displayed at an art gallery in London. Some of the digital assets have sold for millions in recent months. Photo: Bloomberg
NFTs are displayed at an art gallery in London. Some of the digital assets have sold for millions in recent months. Photo: Bloomberg

One businessman lost nine pieces of art held as NFTs valued at nearly HK$930,000 in June after clicking a link to what he thought was a lucky draw website, Ip said. Another man was hacked after using a public Wi-Fi connection at a coffee shop, losing HK$2.9 million in NFTs.

Meanwhile, Jimmy Tong, director of the Securities and Futures Commission’s enforcement division, said his agency had frozen HK$1.1 billion in assets belonging to suspected scammers running “pump and dump” schemes.

In a pump and dump, bad actors who already own shares in cheap stocks trick investors into jumping on board with false or exaggerated claims of future returns. Once the hype has driven up the share price, the scammers sell out, sending the price plummeting.

“There’s no free lunch … Residents should check for corporate or company news related to shares people are asking them to buy,” Tong said. “If there is no related news that could cause a rise in share prices, they should be careful.”

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