Fraud Risk Assessment: Venture Alliance

Venture Alliance
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  • Venture Alliance
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  • Last modified: May 12, 2016
  • Legitimacy
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Venture Alliance (venture-alliance.com) was launched in September 2015 providing Bitcoin investment services from the United Kingdom. The company’s legitimacy has been evaluated based on the items listed below. Every individual item has been checked for the presence of obvious red flags or warning signals. If these are present, an explanation detailing what triggered them has been included. A detailed description of the reasons to evaluate each of the included items can be found below the table.

Persuasion
Total Flags: 12 (3 Warnings = 1 Flag)
Phantom Richesflag-iconVenture Alliance is strongly dangling the prospect of wealth in its introduction: "You are relaxing with your friends, or spending time with family, or traveling, and at the same time the investment is working for your well-being without your involvement.

Allow yourself more leisure time, get everything from your life!"
Scarcitythumb-up-iconN/A
Source Credibilityflag-iconThe service tries to build credibility by stating it has been active since 2009, and now has more than 100 employees. It is said that in 2015 the company decided to restructure, but that doesn't explain why the company didn't register itself before 2015 (see Business Registration). Venture Alliance tells a nice story, but it lacks any real support.
Social Proofflag-iconVenture Alliance offers an extremely high (15%) referral bonus (12% first level and 3% second level). For a real company this would equal giving away the entire profit margin (if not more).
Reciprocitythumb-up-iconN/A
Products
Guaranteed Returnflag-icon"High returns" are "guaranteed"
High Return / Low Riskflag-iconWith Venture Alliance you can expect to earn over 700% return on your investment per year according to the website, at no risk at all. This isn't just disproportionate (risk and return are always related), but also unsustainable for long.
Overly Consistent, Positive Returnsflag-iconThe investment plan returns a perfectly steady positive income percentage regardless of any external variable.
Downplaying Risksflag-iconVenture Alliance tries to make it appear as if the service is perfectly safe, and even states returns are "guaranteed".
Secretive or Complex Trading Strategyflag-iconThe company "invests in high-tech start-ups, which is literally the only information given on how the company generates an income.
Service
Website Availablethumb-up-iconYes
Website Registration Detailsexclamation_warningventure-alliance.com is a newly registered website, registered in September 2015
Website Designthumb-up-iconGood
Grammar on Websiteexclamation_warningThe website features many sloppy mistakes
Payments Optionsexclamation_warningCryptocurrency and other anonymity providing payment methods such a Payeer and Perfect Money only.
Service Disruptions & Unbusinesslike Conductthumb-up-iconN/A
Contact Informationexclamation_warningDespite having "100 employees", none of them have a phone number. The address is, however, provided:

VENTURE ALLIANCE INT LTD
2ND FLOOR, LOWRY MILL, LEES STREET, PENDLEBURY, SWINTON, MANCHESTER, UNITED KINGDOM, M27 6DB
Business
Verified Addressexclamation_warningThe company register confirms the address, but this isn't very reliable (see Business Registration). The location has not been visited.
Verified Ownerflag-iconThe owner's name is Fred Seaman, but despite being in charge of a medium-sized and highly successful company this person has no online footprint.
Business Registrationexclamation_warningAs featured on the website, the company is registered in the UK with company number 09823953 as of October 2015, but it should be noted that Companies House does not actively check addresses and names. This is why registrations in the UK are popular among scammers.
Financial Regulator Registrationflag-iconGiven that Venture Alliance is an Investment Service, it should be regulated by the Financial Conduct Authority (FCA). There is, however, no record of the company in the public register.
Independent Auditsexclamation_warningNone

Note that items with a warning instead of a flag indicate that these could occur at a legitimate company. For example, legitimate companies will normally try to persuade you into buying their products. Multiple warnings will, however, still trigger a flag. A description for the listed items is provided below. This list is meant to assist with identifying obvious scams, and therefore does not provide any guarantees that a company is truly legitimate.

Phantom Riches
The most common tactic used by fraudsters is called “phantom riches”. By dangling the prospect of wealth such as “big payoffs”, the scam artist tries to get you to stop thinking logically.

Scarcity
Using the fear of missing out, fraudsters create a false sense of urgency with statements such as “last chance” or “only so few available”. This causes people to agree hastily, before even having the opportunity to think about what they’re doing.

Source Credibility
Persuasion is more likely when the source presents itself as being credible, expert and trustworthy. Common tactics used by scammers to make themselves look legitimate include using fake websites or hacked emails and pretending to be someone they are not. Alternatively, sources can also be external with claims such as “Warren Buffet has already invested in this”.

Social Proof
Fraudsters take advantage of herd behavior by creating the illusion of consensus or social proof that the investment is legitimate with claims that “everybody is already doing it”, or referral programs in which members encourage their friends and associates to invest as well. This automatically triggers something in the head that says: “if everybody [or someone from the inner circle] wants it, it must be good”.

Reciprocity
A business is likely to receive far more of our trust when it provides a lot of free value, because of the rule of reciprocity which causes us to tend to feel obligated to return favors after people do favors for us

Guaranteed Return
All investments carry some degree of risk, so a guaranteed profit is a clear red flag.

High Return / Low Risk
Like a guaranteed return, a high return / low risk investment opportunity also defies the common risk-return relationship. The best advice is an old one: “if it sounds too good to be true, it probably is”.

Overly Consistent, Positive Returns
Cryptocurrency markets are among the most volatile markets, hence the performance of any related product or service is also expected to fluctuate.

Downplaying Risks
The fraudster will do anything to provide a false sense of security, such as presenting some form of external risk insurance for the investment. In reality, insurance is only seldom acquired and guarantees typically lack substance. Dummy companies are often used to act as the guarantor or insurer. Other actions may include misrepresenting, or even non-disclosure of risks involved.

Secretive or Complex Trading Strategy
Even in the world of cryptocurrencies one should be skeptical about special competitive advantages without any proper disclosure, or when the information is incomprehensible or incomplete. Too often only the positive elements are accentuated.

Website Available
Considering the importance of  domains and websites in the internet age, there is almost no reason for a legit company not to have one.

Website Registration Details
Very few scam websites survive longer than one year, so domains are generally registered for just one year unless otherwise required for the specific domain. For the same reason, websites created less than one year ago should be considered suspicious.

Website Design
Amateurish, cluttered and disorganized websites can point to a scam as many scam sites use text and images from legit websites and other sources which may not work together very well.

Grammar on Website
Many scammers have limited English proficiency.

Payments Options
Even though cryptocurrency payment options are logical for a cryptocurrency company, it is also very convenient for scammers as the recipient essentially remains anonymous. The same goes for services such as Western Union and Moneygram. Hence a lack of alternative payment options should still be considered a warning signal.

Service Disruptions &  Unbusinesslike Conduct
Especially Ponzi scheme promotors will encourage participants to “roll over” their investment. These schemes are not very fond of investors cashing out, which may lead to difficulties receiving payments and a non-responsive or difficult to reach customer service.

Contact Information
Legitimate companies have very little reason not to list their contact information.

Business Verification
First, you should never hand your hard-earned money over without knowing where it is going. Second, you should do a background check to avoid handing it to a known scammer. Be weary of people without an online identity. Scammers will typically try to hide their identity or conceal their true identity to avoid being easily discovered. Especially investment services are normally subject to strict regulatory oversight, so a registration should not be hard to find.

Independent Audits
Audits certainly do not root out every instance of fraud, but auditors do have a responsibility to detect errors or fraud in the company’s financial statements.