The shuttered firms collected public investments without permits, and then embezzled funds paid in by their customers.

Among them were First Travel, which offered low-cost umroh (minor haj) packages and UN Swissindo, a fraud conducted under the guise of credit repayment.

The Taskforce for Investment Alert, which consists of seven government entities including the National Police, the Investment Coordinating Board, the Trade Ministry and the OJK, has shut down 44 entities for engaging in investment scams this year-to-date, up from the 10 entities closed in the full year of 2016.

“We will call on another 11 entities on Sept. 19; most of these companies do not have legal permits and could potentially harm society,” Tongam Lumban Tobing, Taskforce for Investment Alert head, said in Bogor, West Java, during a journalist-training event on Saturday.

These 11 entities, spread mostly on Java Island and in Kalimantan, allegedly offer bogus non-traditional investments, mostly in the form of pyramid-selling.

Pyramid-selling involves paying commission or bonuses to investor clients for every new investor they register, rather from the sale of products.

“Multi-level marketing [MLM] is fine if they sell products and have legal business licenses,” Tongam said. “However, many fraudulent investments usually do not have any products to sell. They only look for new members to get more bonuses,” he added.

Apart from pyramid-selling, other new scams have emerged, one of which involves bogus property investments, such as CPRO-Indonesia (PT Trima Sarana Pratama) that promised people returns of Rp 800 million (US$60,588) for every Rp 6.5 million invested in a mere six-month period.

Besides that, the OJK has also detected a method in which a fraudster clones a specific website with a good reputation, and changes the domain name from “.com” to “.net” to lure victims.

With these many scams, the government has warned the public to be very wary about firms that offer investments with illogically high rates of return but with zero risk, or promises of easy and flexible fund withdrawal but with no clear legal entity.

“If there is a loss caused by investment scams, the government will never bear the losses because there is no legal basis for doing so,” Tongam warned.

Lukas Setia Atmaja, a financial expert from Prasetiya Mulya University, said two types of investors fell prey to investment scams, those who were well aware of the scams but still willing to be part of a Ponzi scheme and those who really had no idea what was going on.

“Indonesian people still have low levels of financial literacy. When they see their relatives or friends joining the investment, they immediately follow,” he said.

So far, the OJK has taken bold measures in dealing with investment scams. However, the process remains slow and focuses on the impact rather than on preventive measures.

“The problem is the lack of coordination since the task force consists of many institutions that can potentially slow down the execution. In reality, fraudulent investments should be dealt with quickly to prevent others from falling victim,” Lukas said.

“There is also a loophole because for instance if a fraudster opens a cooperative-based organization, the OJK can’t revoke its permits because it doesn’t have the authority to issue the permit in the first place,” he added.

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