South Korea's Financial Supervisory Service (FSS) issued a consumer alert urging investors to exercise caution amid a surge in investment fraud cases.
The regulator warned on Wednesday that illegal quasi-banking schemes promising "principal protection" and "high returns" are proliferating, exploiting market volatility caused by Middle East tensions.
"There is no investment that offers both high returns and guaranteed principal," the FSS said. "When someone promises both simultaneously, it is highly likely to be an illegal quasi-banking operation."
The most prevalent scheme involves fake automated trading programs, according to the FSS. Fraudulent operators promote self-made bogus programs, claiming they generate high returns by trading stocks or index futures.
These scammers promise weekly dividends and principal repayment, with contracts stating funds will be returned "without objection" upon request. In reality, promised dividends never materialize, and operators either refuse withdrawal requests or disappear entirely.
Scams disguised as investments in emerging technologies are also increasing. Fraudsters create fake success story videos and websites promoting opportunities in hydrogen energy, drones, or art-tech. After collecting funds through nominee accounts, they demand additional deposits citing taxes or further investment requirements, then vanish.
The illegal operators hire actors to post fabricated investment success stories on YouTube and build professional-looking websites mimicking legitimate investment firms. They frequently change deposit accounts using nominee accounts and fraudulent bank accounts to obscure money trails.
Cases of scammers approaching victims through real estate investment consultations have also been identified. They lure targets with promises of "guaranteed high-return investments" in fictitious businesses, even encouraging victims to take out loans to invest.
"Sensational investment success stories on YouTube are often fake advertisements featuring actors hired by illegal operators," an FSS official said. "Investors should also be particularly wary of AI-generated fraudulent investment advertisements."