Frequently Asked Questions
If it sounds too good to be true it probably is!
Scammers cheat people out of their money. The DFSA, as the financial services regulator of the DIFC, will take action wherever possible to stop scammers who target the DIFC or use the DIFC to promote their scams.
Many scammers remain anonymous and out of the reach of regulatory and enforcement authorities. Consumer education is, therefore, a very important way to minimise the impact of this threat. The DFSA regularly publishes Alerts on its website about the most recent scams affecting the DIFC and investors.
Please contact us as soon as possible if you have information about a scam perpetrated in, from or through the DIFC; or which uses the name of the DIFC, DFSA or persons associated with the DIFC or the DFSA.
You may contact the DFSA through the complaints portal.
Cold calling is a sales contact (phone, email or fax) which has not been asked for. The practice of cold calling itself is not a scam, but it is a common way in which scammers make initial contact with intended victims.
Cold calling about financial products or services by unlicensed firms claiming to be from the DIFC is illegal. You should check the Public Register of the DFSA website for a list of all persons and Firms licensed to provide financial services in or from the DIFC.
It is common for cold calling scams to be operated by overseas companies. Cold calling investment scams operate internationally so local agencies such as the DFSA do not have the jurisdiction, and therefore the authority, to investigate and close down their operations.
Buying financial products or services from overseas cold callers is high risk. If you receive a call from an overseas broker selling shares or financial products you can protect yourself by enquiring with the relevant overseas regulator as to the authenticity of the caller. Simply performing an internet search may not be sufficient protection for you as many scammers have developed sophisticated websites to conceal their true purpose.
Fake bank emails/phishing
This scam takes a number of forms. The most common is an unsolicited email which claims to be from a bank, credit card company or some other service which you may use. It asks for account details, and sometimes a PIN, either by return email or through a website.
The email often states that these details are being requested for 'security and maintenance upgrades', the 'investigation of irregularities', ‘surveys’ or 'bills' or 'charges due'.
These emails can look genuine by using:
Fraudsters scan the internet for email addresses or generate them at random. They may send thousands of such emails. Even if only a few unsuspecting people respond, it is a good result for the scammers.
Banks and financial services companies will never ask for your personal financial particulars over the internet, and therefore you should never provide these details over the internet.
If you have a concern you should always contact your bank.
One of the simplest, yet most effective, scams perpetrated on unsuspecting investors for many years is the Ponzi scheme. A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors from their own money or money paid by subsequent investors, rather than from any actual profits earned.
In these schemes:
If the scammer is disciplined about how much money is left in the account to pay "dividends", the scam can go on for many years. Theoretically, if the scheme continues to draw in enough new investors, it could go on indefinitely.
A very recent example of a large and long-running ponzi scheme is the one run by Bernie Madoff in the United States (US). For information on The Ten Nastiest Ponzi Schemes Ever go to: http://www.businesspundit.com/the-10-nastiest-ponzi-schemes-ever/
A Lottery scam involves an unexpected email advising that a prize has been won in an international lottery. The Lottery described is usually based overseas and one that the recipient of the email never entered. The scammed victim is usually excited about the windfall and keen to claim the money.
The victim responds to the email, and the scammers reply in a polite, professional and helpful manner. The scammers will invariably request a 'fee' that is required in order to process the winnings. That is the fraud. Nothing has been won at all, but winnings are dangled in front of the victim while the scammers try to get as much money as they can in fees and charges.
Lottery scams can take many forms including requests for you to participate in a fictitious lottery. For further information about lottery scams go to: http://www.hoax-slayer.com/email-lottery-scams.html
Boiler room scams
Boiler room operations are share scams. The operator will sell worthless or low value shares at inflated prices to investors. To make matters worse these shares are usually impossible to sell once purchased.
The ruse is simple. A broker, usually operating from an overseas firm, will cold call an investor and propose they buy shares in a particular company. The company’s shares may have also been promoted on online message boards and forums as part of the scam.
The scammers use a number of alternative ruses. The company:
How to Avoid being Scammed
You can avoid being scammed by:
Be wary of the tell-tale signs of a scam such as persons who:
Who to Contact
To find out more information or complain about scams, you can contact the following:
The Dubai Financial Services Authority is the independent regulator of financial and ancillary services conducted in or from the DIFC. You can lodge a complaint online by visiting the DFSA website.
The Securities and Commodities Authority (SCA) is the regulator of securities and commodities within the United Arab Emirates (UAE), excluding the DIFC. It is responsible for ensuring transparency, integrity and justice as well as the development of investment awareness.
Central Bank www.centralbank.ae
The Central Bank of the UAE is the regulator of banks and other financial institutions in the UAE, excluding the DIFC. The main responsibility of the Central Bank is the formulation and implementation of banking, credit and monetary polices to ensure the growth of the national economy of the UAE in a balanced manner.
Dubai Police www.dubaipolice.gov.ae
The Dubai Police seeks to ensure the safety and security of all citizens and residents of Dubai and the UAE. It provides a service by which individuals are able to report suspicious or criminal behaviour.
Dubai Police also has an Economic Crimes Combating Department. The Department can be contacted directly on +971 4 203 6341.
Lists and details of common scams may be found at:
IOSCO Alerts www.iosco.org
DFSA Alerts www.dfsa.ae
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