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Investment Scams

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The Basics of Investment Scams

An investment imposter scam is when someone tries to convince you to invest in a company or opportunity that doesn’t exist. They may promise high returns or tell you that the investment is low risk. The scammer will often create fake documents, websites and social media profiles to make their company look real. They may also use the names of well-known companies or celebrities to make you think their investment is legitimate.

If you’re thinking about investing in an opportunity, do your research first. Make sure you understand the risks involved. Be especially careful if you’re asked to pay upfront for an investment or if the investment guarantee sounds too good to be true. Remember, if it sounds too good to be true, it probably is.

3 Common Tactics Used by an Imposter Scammer

Imposter scams come in many different forms, but there are some common elements that they all share. One of the most important things to remember is that if something sounds too good to be true, it probably is. Here are some common tactics to watch out for:

  • Phantom Riches: This is when scammers promise a huge return on investments that are simply too good to be true. They may claim to have inside information or special access to high-yield investments, but in reality they are just trying to steal your money.
  • Source Credibility: Always be wary of anyone who claims to be an expert on investing, especially if they are not well-known or respected in the industry. Be sure to do your own research and never take someone’s word for it without verifying their credentials first.
  • Social Consensus: This is a classic con artist tactic where the scammer tries to create a false sense of social proof by claiming that everyone is doing it or that you’ll be missing out if you don’t invest now. Be very skeptical of anyone who is trying to pressure you into making an investment decision.
  • Reciprocity: This is another common tactic where scammers try to make you feel obligated to invest by claiming that they have already done so or that they will match your investment. Again, be very skeptical of anyone who is trying to pressure you into making an investment decision.

Step 1:Recognize

Red Flags of an Investment Imposter Scam

If you are contacted by someone claiming they have an investment opportunity that will yield high returns, there are a few things to look out for that may indicate you’re dealing with an investment imposter:

  • The offer sounds too good to be true. If an investment offer promises high returns with little or no risk, it’s likely a scam.
  • You’re pressured to make a decision. A legitimate investment professional will give you time to research an opportunity and make a decision. An imposter will try to pressure you into investing right away.
  • They won’t give you straight answers. If you ask a question about the investment and the person promoting it can’t give you a clear answer, it’s a red flag.
  • They refuse to put anything in writing. Any legitimate investment offer will be in writing. An imposter may avoid putting anything in writing or may send you documents that are hard to understand.
  • They try to keep you from talking to anyone else. An imposter may tell you not to speak with your financial advisor, lawyer or accountant. They don’t want anyone else to know about the “opportunity” because they know it’s a scam.

Step 2:Immediate Actions

If you think you are the victim of an investment imposter scam, it is important to take action right away to protect yourself and your finances. Here are some steps to take if you think you have been scammed:

  • Stop all contact with the individual(s) who contacted you.
  • If you provided financial information, like your credit card number or bank account information, contact your bank or credit card company right away. They may be able to help you cancel the transaction or get your money back.
  • If you sent funds via gift card or money transfer, contact the issuer. They might be able to help you stop the transaction. Find their contact information by visiting their legitimate website.
  • If you provided personal information, like your Social Security number, you may be at risk for identity theft. Keep an eye on your credit report and financial accounts for any unusual activity, and consider placing a freeze on your credit.
  • Save all information and messages provided to you by the scammer. You may need to provide this information to law enforcement if you file a report.

Step 3:Report

Reporting any type of cybercrime, including an investment imposter scam, is imperative to help others avoid being scammed. As a society, the more people that report online scams and fraud, the more national reporting data that is collected, and the better chance law enforcement has to catch the criminals and decrease cybercrime.

Report to FBI

Step 4:Recover

Learn the Three Golden Rules to Spot a Scam

Scammers often utilize tactics to encourage you to act quickly and will use false information to persuade you to send money or personally identifiable information (PII). When faced with a questionable situation online, always follow the three golden rules to spot a scam:

Slow it down — Scammers often create a sense of urgency, hoping you’ll act quickly to their requests for an investment. They may be pushy or aggressive. Take your time and ask questions to avoid being rushed into a bad situation.

Spot check — Do your research to double check that the person is who they say they are and verify the investment opportunity with a reputable source or investment firm.

Stop! Don’t send — Scammers will try to steal your money by rushing you into paying with unconventional payment methods like gift cards or wire transfers. If they insist you send money in the form of gift cards or by wire transfer, it’s a scam.

Take 5 Steps for Better Online Security

Along with making sure you follow the three golden rules to spot a scam, it’s important to strengthen your online security to help avoid all types of online scams. Take action to improve your digital posture by following these steps:

  1. Implement Multi Factor Authentication (MFA): Passwords are generally easy for scammers to crack, and even if you use strong passphrases, there’s still the possibility that a cybercriminal can obtain your passphrase in a data breach. Implementing MFA is a great way to maximize your security and ensure that you are the only one who can gain access to your accounts. MFA should be implemented on all accounts where it is available. Check your account’s security settings to see if it is something you can set up.
  2. Update Your Privacy Settings: Privacy settings allow you to control your personal information (name, address, phone number, date of birth, financial details, photos or videos, etc) and how that information is used. Review your privacy settings on all of your accounts including your social media accounts. Consider restricting who can see your friends list, contacts, photos and posts.
  3. Activate Automatic Updates: Automatic updates are a set of changes to an app, software or operating system that are automatically pushed by the developer to fix or improve it. Oftentimes, cybercriminals take advantage of security flaws to plant malicious software on your devices. By activating automatic updates, you will automatically patch security vulnerabilities to protect your data.
  4. Create Strong Passphrases: A strong passphrase is a string of unrelated words separated by hyphen, space, period, capitalized first letter or number. Use passphrases that are longer than 15 characters and include multiple words that do not have any obvious connection between them. The key to passphrases is randomness. Don’t repeat your passphrases between accounts and consider using a password manager to help you remember.
  5. Learn the Elements of a Phishing Attempt: Familiarize yourself with the elements of a phishing email. Phishing emails tend to include a sense of urgency and multiple grammar and spelling errors. If they are asking you to reveal personal information, be suspicious. If you get a strange email, try contacting the company another way to confirm they sent that email. If the email is suspicious, mark it as spam.

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> Investment Scams: How to Spot Them

Investment Scams: How to Spot Them

Many people claim to offer investment opportunities, but are actually nothing more than schemes to steal your money. Learn how to recognize, report and recover from investment scams.

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