- #InvestWithFCM was a top 5 trending topic on Nigerian Twitter on Monday, November 4th
- The mysterious company named "FCM" got a number of influencers to make it trend
- The company is offering a guaranteed monthly return of 20% on a minimum N50k investment which is a glaring red flag
- Business Insider SSA called the company to ask some questions and the answers were troubling
The social media launch that started with a trending hashtag
Monday night on the Nigerian twitter trends list saw #InvestWithFCM debut in the top 5. Thanks to several random handles each with thousands of followers promoting it, the hashtag caught the attention a number of users in the Nigerian Twittersphere.
Influencers sweeten the pot
Standard practice to increase engagement is offer giveaways and few offers work better than cold hard cash. Several accounts were utilized to generate awareness of the company.
Beware the guaranteed return
FCM is offering a monthly guaranteed return of 20% on a minimum N50k investment. That's 240% annualized. The only returns that are close to guaranteed are Treasury bills and Bonds specifically offered by Sovereign countries and even then, nations have been known to default. Nobody offers guaranteed returns because nobody has a crystal ball that can see into the future and tell how an investment is going to perform. This is a red flag that should be noted.
How does FCM earn 20% monthly?
Business Insider SSA placed a call to the company and was told the following:
"We invest in a number of things but the main thing is forex trading."
The representative never explained what the "other things" were. Cue the alarm bells. Forex trading is a highly volatile and therefore risky investment exercise. Foreign exchange rates move frequently and require a trader to sit in place for hours monitoring multiple screens to spot opportunities. It requires years of experience but even the best forex traders can't guarantee a positive monthly return. Forex traders lose money today, gain some back tomorrow, lose again, and so on. This is one of the worst possible investments to guarantee a 20% return on.
The making of a Ponzi scheme
A Ponzi scheme involves taking money from Investor A, promising a return, then using money from Investor B to pay Investor A. How then does Investor B get their return? There needs to be an Investor C, and for Investor C to be paid, the existence of an Investor D. This fraudulent ring around the roses, known as the greater fool theory, continues until there is no new investor to join the scheme and the whole operation crashes like a deck of cards. Remember MMM?
One can easily see how FCM's investment strategy can get into trouble quickly. Imagine you give them N50k and they invest it in forex but lose your money. Congrats, you are now Investor A. You don't know this, of course. So they will need money from somewhere to pay you your 20% because it is guaranteed. Vicious cycle.
Clueless influencers are promoting a dangerous practice
Multiple Twitter handles that have been paid off to promote this business and hawk the 20% guaranteed return without knowing the details of what they are promoting can have severe consequences, chief of which is hundreds of thousands of Nigerians losing their hard earned money.
Other troubling details revealed in the BI SSA phone call
- The company has no physical office but plans to open a Support center in the future
- The "How it works" and "FAQ" links on its website are blank
- The company is not registered with any regulatory bodies but claimed its partner company "WKC" is registered with a regulator. A google search only brought up the "World Karate Confederation."
"FCM" sounds suspiciously similar to "FCMB"
This may just be a coincidence or a deliberate move to casually create a link to the popular tier 2 Nigerian bank. This might subconsciously lend credibility to the company in the minds of potential investors.
The Nigerian economy is weak, people are struggling, and ripe to be taken advantage of
Nigeria is going through hard times and people are desperate and therefore susceptible to being led astray into risky investments and outright scams. If an investment opportunity sounds too good to be true, it probably is. To borrow from a popular Nigerian parlance, 'shine your eye.'