Investment Scams (2024)

Investment scams claim you’ll likely make a lot of money quickly or easily with little to no risk — usually by investing in the financial markets, cryptocurrency, real estate, or precious metals and coins. These scams often start with free training or seminars, but quickly lead to hefty fees for additional training or coaching that promises to increase your success. Sometimes, investment scammers say their program includes access to a turnkey system of experts that do everything for you, or the opportunity to learn about “proven” investment tricks. But the real tricks are the lies they tell you.

  • What To Know About Investment Scams

  • Signs of an Investment Scam

  • How To Avoid Investment Scams

  • How To Research Investment Opportunities

  • Where To Report Investment Scams

What To Know About Investment Scams

Investment scams claim you’ll make lots of money or big returns investing in a hot new money-making opportunity, including cryptocurrency. These scammers get your attention with infomercials, social media posts, or online ads that often encourage you to attend free events, order free materials, or watch free introductory videos to learn the secret to getting rich. To convince you, scammers may offer financial or investment advice. They’ll often say you’ll likely make lots of money with little effort. They might back up the “guarantee” with success stories of people enjoying lavish lifestyles. No matter the type of investment — cryptocurrency, real estate, or precious metals and coins — these scams use similar tactics and lies to get your money.

Cryptocurrency investment scams often start with a direct message or contact through social media platforms, including dating apps. The person claims they’ve made lots of money through cryptocurrency investing and they’re willing to show you how. They’ll direct you to a site or app to invest, but the company taking your money isn’t really investing it — and the company isn’t real. You’ll see fake reports showing how much your money is growing, and scammers will urge you to invest more. But once you’ve given them money, they’ll shut down the accounts and disappear without a trace.

Investment training scams typically claim their “patented,” “tested,” or “proven” strategy (or something similar) will teach you how to make big money investing in financial markets and products. They’ll often say that their “secret” investment approach will likely change your life — and even let you quit your job. But it’s just empty promises and often worthless training. And those convincing “success stories” of people who have used their program to make big money, buy fancy cars, and live in mansions? Those testimonials are completely made up or a rare exception.

Real estate investment scams claim that a “world-class” property development is a great investment deal. You might see a billboard promotion showing a new luxury development and amenities — or maybe it’s an ad, telemarketing call, social media post or website. The goal? Getting you to listen to a sales pitch and to buy the property as an investment. But once you decide to buy and give them your money, you find out the “world-class” property takes years to build, lacks the promised amenities, or isn’t built at all. And if you try to resell the land, you can’t find a buyer.

Real estate investment training scams often claim their in-person or online training and coaching programs will make investing “risk free” and profitable. To convince you to pay for their training, scammers often say you’ll earn big money with no experience and little work (you won’t). Some scammers promise that you’ll have access to funds without having to put in your own money to invest. Ads or websites often include testimonials from people saying how much money they made, including celebrities praising the program or presenting it as their own. Those kinds of claims aren’t reliable and don’t mean the program works. Investing in real estate is high risk.

Real estate investment training scams might promise you’ll be coached to success each step of the way, but there’s often little meaningful coaching, and no success. To “help” you earn big money, the scammers typically offer additional levels of training or other products and services that will “guarantee” your success or increase your so-called profits. They’ll claim the program worked for other participants — including the organizers — but these success stories are easily (and frequently) made up. For most people who invest in these trainings — some of which cost thousands of dollars to buy into — the pay-off doesn’t match the promise. Most people never get back the money they invested. Read When a Business Offer or Coaching Program Is a Scam to learn more.

Precious metals and coins investment scams often involve scammers calling themselves “metal dealers” or “rare coins merchants.” Whether the market is up or down, they’ll tell you that there’s no better time than now to invest. Their goal? To create a sense of urgency and get you to act quickly. To convince you to trust them, scammers lie about their credentials and experience in these markets. In the end, they often fail to deliver what they promise. Instead, they take your money for themselves.

Before investing in precious metals like bullion, bullion coins, collectible coins, or gold, read theCommodity Futures Trading Commission’s (CFTC) precious metals fraud alert, and find out what questions to ask.

Signs of an Investment Scam

Knowing the tactics scammers use to lure people into investment scams helps you avoid them. Here are some signs you may be dealing with an investment scam:

Scammers promise you’ll make big money, guaranteed income, or guaranteed profits or returns.
Only scammers will guarantee
that you’ll makeover-the-top-profits, earn enough income to quit your job, or beat the stock market.

Scammers claim the investment comes with little risk, time, and effort.
All investments come with the risk that you’ll lose money. Anyone who claims little or no risk, or that an investment will make money without putting in much time and effort is a scammer.

Scammers give few details about the investment.
Before rushing into an investment opportunity, ask questions. Get the details in writing.
If you aren’t given details or documentation about the investment, that’s a sign of a scam.

Scammers say they’ll teach you a secret method or have a proven system to make money.
Anyone who promises a secret method or proven system for making money with little time, effort, or risk is full of empty promises. Only scammers make these types of claims.

Scammers use high-pressure sales tactics.
It’s a red flag if someone pressures you or says to act quickly on an investment. Another red flag? Someone who discourages you from taking time to do some research.

How To Avoid Investment Scams

If you’re thinking about paying for a program that promises to help you invest your money

  • Resist pressure to commit quickly.Scammers want you to act fast and might tell you that space is limited or that you’re getting a special deal. They don’t want you to take time to research the program or think it through.

  • Research investment programs. Search online for the name of the company or program and words like “review,” “scam,” “fraud,” or “complaint.” Other people’s experience with the company can alert you to possible problems.

  • Verify investment claims on your own. Never put money into an investment based only on what someone claims or what you read in an online newsletter, review, or blog. Scammers will often invent stories or testimonials about how successful people are at making money with their investment offer. Another trick? Scammers create the impression that their investment opportunity is just like the latest investment opportunities you hear about in the news. Don’t believe it.

  • Know the risk.Investments always involve risk. There are no guaranteed returns. Don’t trust anyone who plays down the risk of an investment or who acts like risk disclosures are just a formality or something you don’t need to worry about. Scammers want you to think their opportunity is risk-free, but it’s not.

Visit Investor.gov, a U.S. Securities and Exchange Commission (SEC) website, for more advice on investing and avoiding fraud.

How To Research Investment Opportunities

Before you invest, take time to talk to someone you trust — someone you know has your best interest in mind. It’s also the time to do some research on potential investments. Here are some things to consider:

  • Look for information about the reputation of the investment company, its officials, and its promoters. Search online with the name of the company, officials, or promoters plus words like “review,” “scam,” “fraud,” or “complaint” and review several pages of search results.

  • Check if an investment professional or company is licensed or registered. Many investment scams start with unlicensed people or unregistered firms.Check out the background, including registration or license status, of anyone recommending or selling an investment using the free simple search tool onInvestor.gov. For precious metals and coin investments, check with the CFTC database.

  • Avoid putting money into stocks, bonds, notes, and other financial investments not registered with the SEC. Many investment scams often lure people into buying unregistered investments or securities. Generally, anyone selling financial investments or securities must register them with theSEC — unless they’re eligible for an exemption. Check theSEC’s EDGAR databaseand call yourstate securities regulatorfor the registration status of an investment offer and to get more information about the company and the people promoting it.

Where To Report Investment Scams

  • Report someone for using your personal information in an investment scam, and get help with personalized recovery steps atIdentityTheft.gov.

Investment Scams (2024)

FAQs

What are the most common investment scams? ›

Common Investment Scams
  • Investment Seminars and Financial Planning Activity. ...
  • Annuities. ...
  • Illegal securities Offered as Individual Retirement Account (IRA) Investments. ...
  • "Callable" CD's. ...
  • Promissory Notes. ...
  • Predatory Lending. ...
  • Prime Bank Schemes. ...
  • Internet Fraud.

Who are investment scams target audience? ›

Fraudsters target older adults because they often have savings: investments, property, pensions, etc. Older adults may be looking to maximize their investments to help get through retirement and leave money for their children and grandchildren.

How to spot an investment scammer? ›

Watch out for claims of high profits with practically no risk – there really is no such thing. Anyone who tells you an investment is likely to turn a profit quickly should have a basis for the claim. Be especially wary when someone tells you profits will be big enough to offset the risk of investing.

Who is the biggest scammer in stock market? ›

Harshad Mehta Scam

Harshad Mehta, a Mumbai stockbroker, used a banking system loophole to manipulate the stock market. He took advantage of the ready-forward (RF) deals, which allowed banks to borrow money from the interbank market for short periods.

Do banks refund scammed money? ›

If you've transferred money to someone because of a scam

This type of scam is known as an 'authorised push payment'. Your bank or building society should reimburse you if it's registered with the Lending Standards Board under their Contingent Reimbursement Model Code (CRM Code).

How do people fall for investment scams? ›

Scammers act like they are part of the group to win the trust of the group leader and its members. The scammers hope that if the group leader invests, others will invest too. High Yield Investment Programs: Scammers claim you'll make high returns on your money if you invest with them.

How to avoid investment scams? ›

Steps You Can Take To Avoid Investment Fraud
  1. Verify The License Of The Person Selling The Investment. ...
  2. Verify The Investment Is Registered. ...
  3. Beware Of Promises Of High Rates Of Return And/Or Quick Profits. ...
  4. Be Suspicious Of High-Pressure Sales. ...
  5. Beware Of Unsolicited Offers. ...
  6. Ask For Prospectus Or Offering Circular.

What is the riskiest investment you can make? ›

The 10 Riskiest Investments
  1. Options. An option allows a trader to hold a leveraged position in an asset at a lower cost than buying shares of the asset. ...
  2. Futures. ...
  3. Oil and Gas Exploratory Drilling. ...
  4. Limited Partnerships. ...
  5. Penny Stocks. ...
  6. Alternative Investments. ...
  7. High-Yield Bonds. ...
  8. Leveraged ETFs.

Which investment presents the most risk? ›

Equities and real estate generally subject investors to more risks than do bonds and money markets. They also provide the chance for better returns, requiring investors to perform a cost-benefit analysis to determine where their money is best held.

Which is considered the riskiest type of investment? ›

corporate stocks can be considered as the riskiest investment. Investment is risky when returns are uncertain. Corporate bonds have credit risk and interest rate risk.

Who is most likely to be targeted by scams? ›

While there's more to the story, the broad theme is that scams affect every age group, but differently. In 2021, Gen Xers, Millennials, and Gen Z young adults (ages 18-59) were 34% more likely than older adults (ages 60 and over) to report losing money to fraud, and some types of fraud stood out.

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