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Investment Scams
Anytime someone you don't know in person approaches you with an investment, be suspicious.
One trick scammers use is to befriend people on social media and then recommend an investment. Often the scammer will introduce you to other scammers posing as brokers or attorneys. The introductions are meant to make people think there's no need to consult with their own attorneys or brokers. Losses from these scams are typically high.
Scammers have begun using artificial intelligence (AI) to steer people into sham investments. For example, scammers used AI editing tools to alter videos of billionaires like Elon Musk and Jeff Bezos so that they appear to endorse investments that are scams. Because AI can replicate a person's voice and sync sound with the lip movements in existing video, the fakes can be hard to spot.
It helps to remember that people you only know from afar – through social media – are strangers. Never take investment advice from strangers without doing your own research.
Be suspicious of anyone who says that you have to buy now or you'll lose out. This is a high-pressure sales tactic designed to rush you into putting up money before you take time to research the risks.
Protect Yourself
Investment scams may start with:
- Seemingly wrong number texts or messages about a stock tip. If you respond, the scammer says he'll let you in on the deal. These types of scams are called "pump and dumps," because the scammers artificially pump up the price of a worthless stock and then dump them investors who won't be able to recoup their money.
- Someone who begins a friendship or flirtation with you over social media and then suggests an investment.
- Social media posts that push cryptocurrencies that don't really exist – or that promote well-known crypto but lure you to a scam site or app to purchase it.
- Infomercials and social media posts that offer you the "secret" to getting rich. Once you're hooked on the idea, they hit you up for payments to more learn more.
Scammers may try to get people to move their money into apps or cryptocurrency accounts that the scammers control. Although the apps show the investment is growing, when people try to withdraw their money, they can’t.
Bottom line, it's dangerous to invest in markets or products you haven’t researched or don't fully understand. Find tools to help on our Investing Safely page.