Stand:updated on 11.06.2025 | Topic Consumer protection Investments: how to recognise dubious offers
Content
As an investor, you have a wide range of options when investing your money. Many providers – both reputable and disreputable – are vying for your attention. But there are a number of red flags that indicate an provider or product might not be what it seems. In this article, we explain which aspects you should consider. As a general rule, you should be aware of your investment objectives and assess your financial capabilities prior to investing. Do not let anyone put pressure on you or persuade you to make rash decisions. Take as much time as you need to weigh up the pros and cons of each offer before investing your money. The same applies if you are receiving advice.
What are the red flags to look out for when investing money?
You found out about an offer through an advertisement on the internet, on social media or on your smartphone
You should be particularly cautious about these kinds of offers. They can be genuine offers, but they might also be scams. Anyone who believes and acts upon what they see on social media without scrutiny not only risks financial losses – they also risk losing their invested capital in its entirety.
A common scam: fraudsters advertise their products with celebrities who, without their consent, purportedly recommend investment schemes. You will be asked to provide your contact details and make a low initial investment in the scheme. Afterwards you might find yourself receiving unsolicited phone calls in which you are offered investment products.
You are receiving cold calls from unknown persons
Have you received a phone call from an unknown person offering you an investment opportunity? You should exercise great caution here and refuse the offers. Cold calling, as it is known, is generally prohibited.
You are receiving unsolicited emails or have found what appear to be insider tips on the internet
Have you received emails from unknown providers recommending lucrative investment opportunities, for example in stocks, crypto assets or precious metals? Or have you found what appears to be an insider tip on the internet? In most cases, the entities behind these recommendations are dubious providers. You should also be particularly sceptical about products claiming to be innovative.
You are unable to find any clear information
Who is your contracting partner for a financial product? Always check the names of the providers and products by searching for them online. Pay close attention to the spelling – for example of email addresses. Are there any warnings or other cautionary advice about the providers? Local consumer centres are often able to provide information of this kind.
You are being asked to switch to private messenger services
Do not accept requests of this kind. Sensitive data such as account details and personal information are not safe in such places and can end up in the wrong hands.
You are being requested to allow remote access to your computer
Do not do this under any circumstances. Often, a service provider will offer to help you open an account or conduct similar processes. They ask to be connected to your computer using remote maintenance software. This allows them to read and misuse the access data to your computer.
You are being lured with high returns at virtually no risk
Are providers promising high interest on an investment – and at (virtually) no risk? High returns do not necessarily indicate that an offer is a scam. But, generally speaking, the higher the profits promised, the greater the risk that you will lose parts of your invested capital. On the website of the Deutsche Bundesbank you can find out what level of return is customary in the market.
You are being hurried
Is the provider luring you with an exclusive investment opportunity that requires you to make a quick decision? Do not fall for this trick. Never let anyone rush you or put you under pressure. Genuine investment offers do not need to be agreed within a few hours or days. Always clarify how, when and under what conditions you would be returned the amount you invested and what amount you would actually obtain if indeed you were to be repaid.
You are being told to transfer money to another (non-European) country
Asserting claims abroad can involve a lot of time and effort. It can also be difficult to prosecute cases of cross-border fraud.
You do not understand the business model and the product
Generally speaking, the more complex a product is, the more financial trading experience you should have. Take a close look at the product. Do not be taken in by impressive branding or sleek graphics. Only consider a purchase if you have understood the financial product entirely.
Points to always consider
- Obtain detailed information about the contracting partner and the offer.
- Take a particularly cautious approach towards investments offered on the internet.
- Do not accept cold calls or emails from people you do not know.
- Do not open any random attachments or links.
- If you are not sure whether an email is genuine, contact the sender – for example your bank.
- Do not disclose any banking or access data.
- Do not use messenger services when making investments.
- Do not allow yourself to be hurried.
- Do not grant anyone remote access to your computer.
- Regularly check your account and credit card transactions so that you can quickly discover and report any withdrawals that appear incorrect.
Where can you find out more about providers?
From BaFin
Information on whether a particular company has been authorised by BaFin can be found in BaFin’s databases. BaFin also offers information about banking, investment and insurance products and services and information on how to recognise financial fraud and protect yourself against it.
BaFin also issues warnings about companies that might be conducting unauthorised business and publishes the names of companies and persons against which/whom it has taken formal action.
Please note: due to the large number of fraudulent providers and their ever-changing methods, the warnings on the BaFin website can never be exhaustive. A further important point to note is that there has been a marked increase in cases of identity fraud. When in doubt, you should contact the institution in question directly.
Grey capital market
Not all companies operating on the financial market are subject to controls or state supervision. Providers that do not require authorisation from BaFin and have to fulfil only a small number of statutory requirements are operating on the grey capital market. Investors should only put their money into offers in this market segment if they are familiar with the company concerned and are convinced that it will be able to meet its obligations. As stated, such providers are not subject to supervision by BaFin.
From consumer centres
Information on investment topics is provided by the Federation of German Consumer Organisations ( Verbraucherzentrale Bundesverband e.V.) as well as local consumer centres (Verbraucherzentralen). They also often provide lists with the names of untrustworthy providers.
From issuers or providers
Prospectuses, securities information sheets, capital investment prospectuses and/or capital investment information sheets contain important information about the issuer and the product on offer. Such documentation also contains a detailed description of the risks you should be aware of before investing your money. Information about the documents that have been submitted to BaFin for securities and other investment products can be found in the databases on the BaFin website.
What can BaFin do for you?
BaFin’s responsibilities
BaFin foremost responsibility is to supervise banks, financial services providers, insurance companies, German asset managers and investment funds. It seeks to ensure that market participants comply with the laws.
BaFin protects consumers as a whole in the financial services area. The responsibility for protecting individual consumers lies with ombudspersons, dispute resolution entities and the courts.
BaFin consumer helpline
BaFin offers a consumer helpline for any questions you might have. BaFin’s consumer helpline is open Monday to Friday from 8.00 a.m. to 6.00 p.m. and can be reached by dialling 0 800 2 100 500 or +49 (0) 228 299 70 299 (from outside Germany).
Have you fallen victim to fraud?
As a general rule, if you believe that a fraudulent offer is being made to you or that you have fallen victim to scammers, you should report the case to the police or public prosecutor's office as quickly as possible.
Blocking bank accounts
Contact your bank immediately and, if necessary, have them block your bank account. You can have your account blocked by calling the emergency hotline 116 116.
