China Life Insurance Tianjin Branch Financial Risk Reminder: Common Methods of Illegal Fundraising

The reason illegal fundraising activities continue despite repeated bans is not because their scams are particularly clever or difficult to see through, but because they exploit inherent human greed and natural trust in family, friends, and authority. From seemingly enticing promises of “high returns” to using close relationships for “emotional deception,” scammers constantly innovate their methods, making it difficult for ordinary people who lack sufficient financial knowledge and vigilance to defend themselves, often falling into carefully designed traps.

Today, China Life Insurance Tianjin Branch will introduce the four common tactics used in illegal fundraising activities, aiming to help the public see through the complex appearances and recognize the underlying “tricks” and logic behind these scams. This will enhance your ability to identify and prevent risks, effectively protecting your hard-earned money and that of your family.

1. Promising high returns to weave a wealth illusion

Scammers often fabricate stories of “pie in the sky” or “getting rich overnight,” using promises of returns far exceeding market reasonable levels as bait to attract investors. To quickly gather funds initially and establish false credibility, illegal fundraisers often fulfill or even exceed their promised principal and interest on schedule during the early stages, creating the illusion of a reliable project with generous returns. However, once the scale of fundraising reaches a certain point and the funds pool becomes large enough, they quietly transfer assets and abscond with the money, leaving later investors with nothing but heavy losses.

2. Faking projects and disguising as legitimate

Many scammers register seemingly legitimate companies or enterprises to cloak their illegal activities. They often claim to support national policies, promote emerging industries, or encourage entrepreneurship and innovation, carefully creating false investment projects or financial products. To further gain public trust, they sometimes organize free tours, visits, inspections, or luxurious banquets, creating an illusion of high-end professionalism. These tactics gradually eliminate investors’ doubts and lure them into investing.

3. Using false publicity to create an aura of authority

In promotional efforts, illegal fundraisers often spend large sums on packaging. They may hire celebrities or social influencers as endorsers or spokespeople to boost credibility; place extensive advertisements on mainstream TV, radio, online platforms, and social media; publish interviews or soft articles in well-known newspapers; distribute attractive flyers on streets and in neighborhoods; or even engage in charitable donations to build a positive social image. All these methods aim to create an illusion of a strong, widely recognized project, misleading the public into misjudging its legitimacy.

4. Using family and friendship networks to deceive

This method is particularly covert and harmful, often seen in illegal fundraising activities with pyramid scheme characteristics. Early participants, seeking to boost their performance for higher rebates or hierarchical rewards, tend to exploit familial, friendship, or regional ties. They may tell their relatives, friends, classmates, or colleagues false stories of earning substantial returns through the project, sharing fake success stories to induce trust and encourage others to join. This trust-based dissemination causes the scale of fundraising within personal networks to grow rapidly, resulting in far-reaching harm.

China Life Insurance Tianjin Branch warmly reminds: illegal fundraising activities often disguise themselves as “legitimate,” using trendy concepts like “financial innovation,” “high-tech projects,” or “high-yield financial products” as cover to lure victims step by step into traps. Remember, a fundamental rule in investment and finance is: high returns always come with high risks. Any investment promising “principal and interest guaranteed” or “risk-free profit” with yields significantly above normal levels is highly likely to be problematic. Stay alert and protect your assets by actively learning to recognize these common scams.

Source: China Life Insurance Co., Ltd. Service Account