Point Breeze Credit Union Blog

Investment Scams

Cybercriminals are relying on tricking victims into giving away sensitive information that will lead to financial fraud.

Based on the FBI’s most recent internet crime report, investment fraud saw a 38% increase in 2023 with losses accruing up to $4.57 billion dollars. It is important to note that the FBI has seen investment scam losses increase exponentially since 2020, showing no signs of slowing down. Cybercriminals are relying on tricking victims into giving away sensitive information that will lead to financial fraud. It is vital to understand that investment scams are designed to target victims associated with various areas such as financial institutions, real estate, cryptocurrency, and more.

What are Investment Scams?

Investment scams are fraudulent practices that prey on individuals or businesses seeking financial gains. Typically, these scams promise substantial monetary gains with little to no risk, enticing victims to invest their money on said scam. Investment scams can be applied in a variety of ways. For example, scammers will use infomercials, social media, online ads, emails, or calls to reach out to unsuspecting victims. Therefore, it is imperative that you verify any requests before responding to ensure it is a legitimate contact.

Types of Investment Scams

Some of the most common type of investment scams are listed below:

  • Investment Training: Scammers will make empty promises and claim that they have a “patented” or “proven” strategy that will teach you how to ”Get rich” fast by investing into specific products or markets.
  • Real Estate: These scams claim that there is a lucrative property development deal that you can’t pass up. The goal of this scam is to get you to listen to their sales pitch and convince you to act urgently and invest money on a property that is either inadequate or nonexistent.
  • Ponzi/Pyramid Scheme: These schemes occur when investors earn potential returns by recruiting more investors. However, the investments are usually fake and very few assets actually exist. Therefore, as the total number of investors grow, the supply of new investors slows down. This eventually leads to not enough money being made to pay any promised returns or cover the investors trying to cash out.  

How to identify Investment Scams:

Avoiding investment scams requires vigilance and skepticism. Below are some essential tips to protect you and your accounts:

  • Research thoroughly: Investigate any investment opportunities before making a decision. Doing your own research by tracking the company, track record, and the people behind it will give you good idea on whether it’s legitimate or not.
  • Be skeptical: It is always best practice to remain skeptical of any promises, especially if they promote high returns with little risk. It may be too good to be true.
  • Beware of cold calls/unsolicited emails: Be wary of unexpected phone calls or emails as more legitimate investments don’t typically approach investors like this. Do not provide or confirm any sensitive information.
  • Avoid pressure tactics: Scammers often pressure you into making a hasty decision. Take your time and investigate thoroughly.
  • Educate yourself: Stay up to date on the latest investment scams, different investment types, and common tactics. The more informed you are, the better equipped you will be to notice red flags and protect yourself from fraud.

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