What is a red flag?
A red flag is a warning sign: something that should make you stop and ask questions. A single red flag does not prove fraud. But when two or three show up in the same offer, the risk is much higher, and it needs very careful checking before any money changes hands.
Scammers know what people respond to: greed, fear, and the feeling that “everyone is doing it”. So the red flags mostly circle around these three. However good the story, once you learn to see the signs, you can see what is really behind it.
Say a relative abroad writes on WhatsApp: “I’m investing in an app, 1% profit every day. They stop taking new members after midnight tonight. Send the money to my number and I’ll put it in for you.” One message, four red flags: an abnormal return, a deadline, money to a personal number, and an “app” with no licence mentioned anywhere. The story is made up.
Why it matters to an investor
- Fraud is easy to spot before you join and hard to undo after: once a scheme collapses, getting money back is very difficult.
- The same signs keep coming back: from Ponzi a century ago to today’s apps, the core tricks barely change.
- It mostly arrives through people you know: a relative, friend or colleague may pass it on without understanding it, so check what is being offered, not who is offering it.
- Learning to compare with real investments: knowing what a normal return looks like, and what is impossible, makes greed less dangerous.
Five big red flags
- Guaranteed, high and steady returns: “no risk”, “a guaranteed 10% a month”, and the same profit every time whatever the markets do. In reality higher return means higher risk, and real investments go up and down.
- Pressure and urgency: “last chance today”, “limited seats”, “no need to tell your family”. A genuine opportunity usually lets you take time to think.
- No licence, or none you can check: an organisation taking people’s money almost always needs a regulator’s licence (Bangladesh Bank, BSEC, IDRA, MRA). Look the name up on the regulator’s own website, not on a certificate they show you.
- A vague or “secret” business: nobody can explain in plain words where the money goes or where the profit comes from, or the main income comes from recruiting new members.
- Easy to pay in, hard to take out: being asked to send money to a personal mobile number or individual’s account, no written contract or receipt, and “fees”, “taxes” or delays when you try to withdraw.
Some subtler signs
Many scams build trust through religion, patriotism, locality or profession: “this opportunity is just for people like us”. Sometimes there are familiar faces, events at smart venues, expensive cars or screenshots of profits. None of these proves the business is real.
Another sign is irritation at questions: “you think you know better”, “if you don’t trust us, stay out”. A genuine organisation does not mind giving written information and answering questions.
Worked example
- Say someone promises “just 1% profit a day”. It sounds small. But compounded over 365 days, 1.01 multiplied by itself 365 times comes to about 37.8.
- So Tk 1,00,000 would become about Tk 37,80,000 in a year. No normal business anywhere earns like this year after year.
- “10% a month” on the same arithmetic is 1.10 multiplied 12 times = about 3.14, so the money more than triples in a year.
Result: convert any daily or monthly rate into a yearly one and compare it with the published rates at licensed places such as banks or sanchayapatra. If the gap is enormous, assume the sums do not add up. The numbers are only an example.
Common mistakes
- Looking for one sign and deciding “that one isn’t there, so it’s fine”. Scammers know which signs to hide.
- Treating a monthly or daily rate as small without working out what it means over a year.
- Skipping the checks because others are being paid. Early payouts are the trick in many scams.
- Thinking “I’ll just try a small amount”. A profit on a small sum is often what draws you into putting in a big one.
Guaranteed high returns, pressure, no licence, a vague business, trouble withdrawing: if you see any two together, stop and check.