Characteristics of investment scams in Malaysia: evidence from reported cases

Investment scams are fraudulent schemes that promise high returns with little to no risk. They are designed to deceive individuals into funding non-existent or illegitimate ventures. In the digital age, these scams have become increasingly sophisticated, as information spreads rapidly, and scammers can easily manufacture a false sense of trust. Consequently, fraudulent schemes continue to proliferate in Malaysia despite the regulatory efforts of the Securities Commission Malaysia (SC) and Bank Negara Malaysia (BNM). The data from BNM’s Financial Consumer Alert List, which tracks unauthorized entities and schemes, demonstrates that scam activity has fluctuated but persisted over the years. For instance, the number of unauthorized entities was relatively high between 2012 and 2016, and spiked dramatically in 2017. Although it declined in subsequent years, it exhibits periodic resurgence up to 2025. This finding indicates that scammers continuously adapt their tactics, keeping such threats active in the financial landscape. Similarly, SC Malaysia publishes an Investor Alert List to help investors identify unlicensed activities, suspicious schemes, and cloned firms that misuse the SC’s name or logo. This initiative is intended to guide investors in making informed decisions and to prevent them from falling victim to fraudulent schemes masquerading as legitimate investment opportunities. This paper utilizes reported cases from reputable newspapers and regulatory alerts to identify recurring patterns in fraudulent schemes. Thus, by examining these real-world incidents, the paper highlights the core characteristics of current investment scams. This approach allows investors to recognize warning signs, verify legitimacy, and avoid falling victim to increasingly complex fraudulent schemes.