Japan's inexperienced investors fall for scams 'like babies'

As Japan's stock market booms, something else is also on the rise in the nation: investment scams.

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Criminals have been quick to exploit the paradigm shift that has seen a relatively financially inexperienced population turn to investing, spurred by rising consumer prices and government encouragement to find higher returns for their savings.

In the first quarter, Japan saw a sevenfold increase in money lost to investment scams from a year earlier, according to the National Police Agency.

The agency began tracking the data in January 2023, and the latest statistics show there were 1,700 scams reported in the first three months of 2024, with an average of 13 million yen (S$112,400) lost in each case.

"For the scammers, it's no risk, high return," said Organisation of Investment Scam Victims president Kazuhide Saijo. "Japan has only taught people to work hard and save money. In terms of investment, people are like babies."

While investment scams have proliferated around the world in recent years, Japan had been comparatively unscathed, protected by a deflationary environment that led consumers to simply hoard cash.

But the return of inflation, which hit a four-decade high in 2023, combined with the government's measures to entice people to invest in Japanese stocks, has created an environment for fraud to flourish.