A personal due-diligence checklist for any investment offer and a written fraud-response plan

What you will learn

• How to turn the warning signs from this course into a scored checklist with hard stops.
• How to cap the amount you expose to any single unverified offer.
• How to write a fraud-response plan with contacts, deadlines and a decision tree before you ever need it.
• How to review and maintain both documents once a year.

Explanation

Everything in this course can be reduced to two pages. The first is a due-diligence checklist you apply before money moves. The second is a fraud-response plan you execute after something goes wrong, when you will be stressed and tempted to act in the wrong order. Writing both down matters because fraud works on emotions: urgency, trust and shame. A written rule you set on a calm day beats a decision made under pressure.

Part 1: the due-diligence checklist

The checklist has two layers: hard stops, where a single "yes" ends the evaluation, and scored items, where you count points. The hard stops are items that, in the cases from lessons 1 to 6, were present in almost every fraud.

If no hard stop fires, score the following items one point each: (1) the legal nature of what you buy is clear in one sentence (deposit, security, fund unit, issuer debt, subordinated claim, crypto claim) and you know which protection layer applies; (2) all costs are shown in euros and percent before purchase; (3) the product has a prospectus, a key information document or an information sheet, and you have read the risk section and the subordination clause; (4) the counterparty's licence covers the specific service (brokerage, custody, advice), not merely "registered as a company"; (5) the contact came from your own research, not from an advertisement, a cold call, a social-media message or a friend passing on a tip; (6) a stated track record is independently verifiable (audited statements, exchange data), not screenshots; (7) you can exit, and you know how long it takes and what it costs; (8) you can explain the product to another adult in two minutes. Rule of thumb: fewer than 6 of 8 points means do not invest; 6 or 7 means invest only within your unverified-offer cap; 8 means normal position sizing applies.

The unverified-offer cap

Some legal offers (grey-market loans, early-stage crowdfunding, small foreign platforms) will score 6 or 7 and still carry total-loss risk with no safety net. Set a cap in advance: for example, at most 5 % of liquid net worth across all such offers combined, and never money you need within five years. The cap converts a judgement call into arithmetic you cannot argue with when excited.

Part 2: the fraud-response plan

Write it as a numbered sequence with phone numbers and account identifiers filled in, and store a printed copy with your access document (lesson 11).

1. Stop the bleeding (hour 0): block cards (central blocking number 116 116 in Germany), freeze online banking, cancel standing orders and mandates to the counterparty, change the e-mail password and second factor first, then the broker and bank credentials.
2. Recall and dispute (day 0 to 1): call the bank's fraud line for each payment: recall for transfers, chargeback for cards, return for direct debits; note the deadlines from lesson 9 next to each payment type.
3. Document (day 0 to 2): one chronology file with dates, amounts, IBANs, wallet addresses, URLs, screenshots and names used by the counterparty.
4. Report (day 1 to 7): Strafanzeige via the Onlinewache of your state; BaFin complaint or warning report; for licensed firms also the written complaint required before any Ombudsmann procedure; inform the receiving bank with the case number.
5. Protect against round two (ongoing): treat every call about "recovering" the money as fraud; tell one trusted person so that the isolation technique cannot work again.
6. Review (month 1): check limitation periods, consider the Verbraucherzentrale or a lawyer for amounts that justify it, and update the checklist with whatever you missed.

Worked example

Hypothetical example: Dario, liquid net worth €80,000, receives an offer through a former colleague: a Luxembourg-based "asset management" firm offers an "algorithmic trading account" with a fixed 1.5 % per month, minimum €10,000, paid by transfer to an account in Lithuania in the name of a payment-services company. The firm's website shows a BaFin "registration". Fees and taxes are ignored.

1. Hard stops: "fixed 1.5 % per month" is a guaranteed return of about 19.6 % per year (1.015 to the power of 12 minus one), far above any risk-free rate: hard stop fires. The payment account is in another name and country: a second hard stop. Dario does not even need the BaFin database check, although he does it and finds a warning notice about a clone.
2. If instead the offer had passed the hard stops and scored 6 of 8, his cap would apply: 5 % × €80,000 = €4,000 maximum, well below the €10,000 minimum. The offer fails on sizing alone.
3. Expected cost of being wrong: suppose Dario had ignored the rules and paid €10,000, and the realistic recovery after a fraud is 0 % for the transfer. His loss would be 12.5 % of liquid net worth from a single decision, versus a maximum of 5 % under the cap.

Dario declines in writing, keeps the e-mails, and sends the warning link to the former colleague, which is the affinity-fraud countermeasure from lesson 6.

Common mistake

Practice activity

On paper, write your own two documents. Checklist: copy the five hard stops, the eight scored items and your personal cap in euros (choose a percentage of your liquid net worth and calculate it). Response plan: fill in the six steps with your bank's fraud hotline, your card-blocking number, your state's Onlinewache, your broker's security contact and the name of your trusted person. Then test the checklist on this hypothetical offer: a German bank you already use recommends a certificate issued by itself, all costs disclosed (2.1 % total over the term), prospectus available, no urgency, exit possible daily on the exchange, return linked to an index with a cap. Score it.

Key takeaways

• Five hard stops catch almost every outright fraud; eight scored items catch poor but legal offers.
• A fixed cap on unverified offers, set in euros in advance, replaces willpower with arithmetic.
• A written response plan, ordered by expiry of options, is what makes the lesson 9 deadlines usable under stress.
• Apply both documents to trusted sources and respectable products, not only to strangers, and review them once a year.

Next step

You have completed Fraud, Scams & Investor Protection; continue with the course "Taxes for Investors & Traders in Germany in Depth" to understand how your protected and recovered money is taxed, from Abgeltungsteuer mechanics to loss offsetting and documentation.