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Online Investment Scams
How to Protect Yourself
What are online investment scams?
Online investment scams are fraudulent schemes that use deceptive techniques to convince people to invest money via fake online platforms. These scams often promise “exclusive” or “insider” trading tips with lucrative returns and can target anyone.
Cryptocurrency investment fraud, which the FBI has termed ‘pig butchering,’ is the most common form of online investment fraud. Victims reported nearly $4 billion in losses in 2023 according to the FBI’s 2023 Internet Crime Report. Scams involving investing in precious metals are also prevalent, targeting the elderly. With most online investment scams, the scammer will contact the victim either randomly or under the guise of a friendship or romantic relationship, creating storylines to establish trust.
With promises of easy wealth with low risk and high returns, the scammer convinces the victim to “invest” using a platform resembling a legitimate trading website or app. The scammer then advises the victim to make higher value investments until they try to make a large withdrawal, only to have the scammer disappear with the funds.
Recovery of funds in online investment scams, especially involving cryptocurrency, is nearly impossible – it’s best to avoid getting involved in the first place.
Recognize the signs
Education is key to avoiding online investment scams. Keep these things in mind when you meet people online:
- Don't respond to unsolicited text messages. If you receive a message from someone you don’t know, don’t respond and delete it.
- Be cautious if someone wants to move to a different communication channel. Some third-party apps are commonly used to commit fraud.
- Beware of new contacts or friends who encourage you to invest with them, especially in virtual currency, including cryptocurrency and stablecoins. Don’t take investment advice from people you meet online, and do not make investment decisions with people you do not know or have not met in person. If someone claims to be a broker, use the FINRA website to ensure they are licensed.
- Don't click links or download apps/services that someone else sends you. Do your own research when it comes to verifying sites and apps. Do not download apps outside of your device’s app store.
- Be mindful of 'exclusive' or 'secret' investment opportunities or people who encourage you to be dishonest with current financial advisors. Talk with trusted advisors (tax, investment, banking, etc.) before taking on new investments. Beware of anyone pressuring you to move money out of an existing investment, encouraging urgent transactions or demanding specific amounts be invested in specific timeframes.
- Know how to spot a fake website. Hover over the website’s URL to make sure the address matches the perceived destination. Check for misspellings in the URL, nonfunctioning buttons and grammatical errors. Notice if there is no privacy policy, About or Contact page, or pop-ups asking you to enter personal information.
- If it sounds too good to be true, it is. Use good judgment to protect yourself and your money.
If you are a victim
If you believe you have fallen victim to an online investment scam, do the following:
Stop all communication. Cease communication with the scammer and block the numbers of anyone involved.
Report it. Contact your financial institution immediately and file a report at IC3.gov and with your local police. Report the scam accounts to the respective social media or messaging platforms. Report fake mobile investment applications to the Federal Trade Commission.
Change your passwords and monitor your accounts. If you used the same credentials on the fake platform as you did on legitimate accounts, change them. Implement multifactor authentication on your accounts. Watch your legitimate financial accounts for signs of fraud and consider freezing your credit.
Check for viruses. If you have downloaded a fake investment app, have your device professionally cleaned of any viruses or malware.
Read a summary of privacy rights for California residents which outlines the types of information we collect, and how and why we use that information.