Investment Scams

• 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 the Commodity 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 make over-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 on Investor.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 the SEC — unless they’re eligible for an exemption. Check the SEC’s EDGAR database and call your state securities regulator for 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 investment fraud and scams to

  • the FTC at ReportFraud.ftc.gov

  • the SEC at sec.gov/tcr

• Report precious metals or commodities fraud to the CFTC at cftc.gov/complaint.

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