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This study aims to propose a law enforcement strategy for investment fraud through comparative studies in the United States of America (USA), Canada and Indonesia, and to identify the factors that cause weak law enforcement on investment fraud with the object of a binary options case study in Indonesia.

This research is a type of legal research, namely, research based on legal materials (library-based). The legal materials used include primary legal materials and secondary legal materials. The approaches used are the statute approach, the case approach and the comparative approach. The data collection technique used in this research is a literature study. The analysis was carried out qualitatively by using an interactive model.

In 2022, the Indonesian Financial Services Authority (OJK) recorded that the total value of public losses because of investment fraud in Indonesia reached 117.4tn IDR. Weak law enforcement is the reason investment fraud thrives in society. Strategies that can be implemented to prevent investment fraud include early detection of new investment fraud modes through the whistleblower program, mutual legal assistance in criminal matters, criminal restitution and improvement of public financial literacy.

This study examines the problems of law enforcement against investment fraud with a case study of binary options in Indonesia. A law enforcement strategy is built on identifying issues and adopting law enforcement policies against investment fraud in Canada and the USA.

For individuals, the results of this research can be used as reading material to increase their understanding of investment fraud. For the government, the results of this study can be a reference in an effort to eradicate the rise of investment fraud cases more effectively and create a safe digital economic space for investors.

The results of this study are expected to be useful in providing recommendations for strategies to strengthen law enforcement against the problems of investment fraud cases so as to form a conducive investment climate in the sense of being safe, comfortable and profitable.

Legal frameworks to prevent investment fraud are rarely discussed. The rise in binary options cases that occur is an indication of weak law enforcement in the investment sector. Therefore, an in-depth study of law enforcement strategies to prevent investment fraud is needed, with comparative studies in the USA, Canada and Indonesia.

This paper aims to explore various cultural and behavioral issues associated with the problem of investment fraud in Indonesia.

By examining multiple cases of investment fraud in Indonesia as well as reviewing publicly available government reports, this study highlights several important cultural and behavioral issues associated with the susceptibility of Indonesian financial services consumers to investment fraud to understand better the dynamics of the victimization process. By using multiple cultural and behavioral theories, this study demonstrates how such issues shape the interactions between investment fraudsters and investment fraud victims.

This study demonstrates that multiple cultural and behavioral factors have created and shaped an environment where fraudsters can exploit people’s behavioral loopholes for their fraudulent schemes. In particular, the high power distance and high collectivism have been identified by this study as contributing to the high level of materialism in the country, which in turn makes people more susceptible to the temptation of get-rich-quick schemes. Investment fraudsters, being students of human behavior, use their behavioral knowledge to devise various means to deceive their victims. They use multiple psychological principles to stimulate target victims “gullibility to make them more vulnerable to fraudulent persuasion. In many cases, even financially literate people are not immune to fraudsters” deceitful messages. This study highlights gullibility production as a foundation for investment fraudsters to devise their means by which victims are manipulated to accept certain beliefs that depart from facts and evidence.

This paper contributes to the innovation in anti-fraud practice by building a better understanding of multiple cultural and behavioral issues associated with investment fraud victimization.

This paper brings a new perspective into the field of anti-fraud to stimulate innovation, in particular in investment fraud prevention.

The purpose of this paper is to examine the measures taken by legitimate wine investment companies and enforcement agencies to counter alternative investment scams.

The authors interviewed wine industry and law enforcement specialists to understand the nature of wine investment fraud and the characteristics of the victims. They also drew on secondary data in the form of government agency research and media sources.

The majority of wine investment frauds are boiler room operations, using social engineering techniques to draw victims into the fraud. The authors conclude that countering wine investment fraud requires public education by government, the wine industry and the police.

This is a small-scale study that uses interviews with experts in the industry and in law enforcement and secondary data as evidence. Despite the limitations in the number of interviews, the authors are able to comment on the social impacts of alternative investment scams and suggest a theoretical basis for future work in the field.

The authors make a case for regulators and investors to be part of collective action through education and public awareness campaigns to combat alternative investment fraud.

The authors outline how collective action theory might be extended to investigate fraud prevention measures in other financial and commodity markets.

The purpose of this paper is to undertake an exploratory study on mapping the investment fraud methods and tactics used by scammers against the emerging literature on scam compliance.

Qualitative interviews were conducted with victims of investment fraud supported by the engagement of specialist counsellors and allied health professionals who specialise in scam victim support (including investment fraud).

Investment fraud offending in the cases sampled exhibited a number of dominant offending traits and methodological themes. These included a strong reliance or dependency on legitimate service provisioning on the part of the fraudster and the use of key trust measures to lure the victim. The empirical data revealed the presence of a number of scam compliance influences captured in the literature, including trust, social influence and urgency, as well as others not previously documented that pave the way for further research attention.

The research only examined a sample of investment fraud victim experiences that engaged a national victim support service immediately following detection over a 24 month period.

The research found that offending relied upon the participation of trust-building signals and measures. Legitimate economy participants appear to play a dominant role in enabling investment scam activities, further creating efficiencies for criminals. The offending tended to follow a number of distinct but connected phases. Impacts were influenced by specific offending attributes, such as whether remote access was given to offenders of a victim’s device, as well as the nature of the identity credentials access.

The research has practically applied an emerging view of scam compliance influences and vulnerabilities within an investment fraud context. The study is novel in its thematic analysis of the distinct phases and tactics used by scammers.

Dubious investment schemes by unlisted companies are alluring individual investors at the base of the pyramid to invest money and lose them. The purpose of the abstract is to identify the factors that induce the people at base-of-pyramid (BoP) to invest in fraudulent schemes.

Open-ended interviews of people at the BoP from areas in and around Kharagpur town in West Bengal were conducted. Through open coding, codes, categories and themes were generated.

Interpersonal trusts form the central feature of investment fraud. The personal relationship among the community members helps these schemes thrive. False hopes of higher returns within a short span combined with constraints of accessing banking services is another motivation for the people at the base of the pyramid to fall prey to these schemes. With limited education, they find these investment avenues convenient providing scope to the perpetrators of fraud to exploit them. To curb these dubious schemes to flourish and exploit the people at the BoP, financial inclusion on a large scale is required. Moreover, the government should take steps to educate the mass at the base of the pyramid.

This study offers new insights on the victims of investment fraud in India those belonging to the economically weak groups and lower income groups comprising together as the BoP) of the society.

The purpose of this paper is to investigate the insurance market in which moral hazard and insurance fraud coexist. In this situation, this research examines the relationship between moral hazard and insurance fraud. Also, this research shows how the amount of policyholder's effort to lower accident probability changes when insurance firm increases their investment in preventing insurance fraud.

Using a theoretical model containing five‐stages, the author sheds light on how the possibility of insurance fraud affects the amount of policyholder's effort.

The main results of this research are as follows. First, the amount of policyholder's effort is a weakly monotone decreasing function of the insurance firm's investment in preventing insurance fraud. Second, unlike in previous moral hazard models, the policyholder chooses a strictly positive amount of effort even in the full insurance case because the possibility of insurance fraud gives an incentive to realize policyholder's effort. Third, the amount of insurance firm's investment in preventing insurance fraud depends on whether it wants to give an additional incentive to policyholder's effort in exchange for realizing the possibility of insurance fraud.

This is the first paper to investigate the relationship between moral hazard and insurance fraud by using the microeconomic theory.

The purpose of this paper is two fold: educate investors about hedge fund managers' activities prior to the fraud recognition by the authorities and to help investors and other stakeholders in the hedge fund industry identify red flags before fraud is actually committed.

The paper investigates fraud committed by the Bayou Funds, Beacon Hill Asset Management, Lancer Management Group (LMG), Lipper & Company and Maricopa investment fund. The fraud activities took place during 2000 and 2005.

The five cases alone cost the hedge fund investors more than $1.5 billion. Investors may have had a good opportunity for avoiding the irrecoverable costs of the fraud had they carefully vetted the backgrounds of the hedge fund managers and/or continuously monitored the funds activities, especially during turbulent market environments.

This is the first research paper to identify and extensively investigate fraud committed by hedge funds. In spite of the size of the hedge fund industry and relatively substantial level and inevitably recurring fraud, academic journals are to yet address this issue. The paper is of great value to hedge funds and their individual and institutional investors, asset managers, financial advisers and regulators.