How to Spot Investment Scams

“If it sounds too good to be true, it probably is.” Those are words to live by when you’re spending time online – and possibly coming face-to-face with investment scams.

According to the Federal Trade Commission, phony investment scams are on the rise. Consumers losses ballooned from $1.7 billion in 2021 to $4.6 billion in 2023.

The FTC says that investment scams typically claim that you’re poised to make a lot of money in a short amount of time with minimal risk, “usually by investing in the financial markets, cryptocurrency, real estate, or precious metals or coins.” These scams take many shapes – from social media posts or ads inviting you to attend free events to direct messages on social media or dating platforms.

Here are the signs of an investment scam, according to the FTC:

• The promise of profits or returns: Only a scammer will guarantee that you’ll make big money.
• Claims of little to no risk, time, or effort: Scammers will try to convince you that you have nothing to lose – when the opposite is true.
• Few details: If the person promising an investment opportunity is not forthcoming about details or documentation, that’s a red flag.
• High-pressure tactics: If someone is applying pressure, urging you to act quickly, or discouraging you from taking time to do research, you should steer clear.

So what should you do when you encounter a “too good to be true” investment opportunity?

• Do your own research: Before you move any of your money, make sure you’re fully informed about what you’re investing in. Here’s a tip: try searching online for the name of the company or person you’re dealing with, along with the words “review,” “complaint,” or “scam.”
• Don’t accept unsolicited offers: If someone calls, texts, or emails you out of nowhere with an “amazing” offer, you’re likely dealing with a scammer.
• Resist the promise of big earnings: There’s no such thing as a guaranteed investment. If someone claims there’s no risk, they’re not being honest.
• Reject the high-pressure pitch: If someone is pressuring you into acting quickly, they don’t have your best interests in mind.

We recommend that you share these tips with a friend. You never know – you could help someone avoid financial disaster.

Visit the FIBT Education Center for even more tips on how to stay safe online and keep your financial information secure!