Latest news with #investmentScams
Fast Company
5 days ago
- Business
- Fast Company
Here's how to spot 4 common investment scams
Recently, I was telling a friend about a marketing pitch I'd received that ended with a hard sell. I mentioned to my friend that I was still thinking about the pitch, which promised to generate leads for my freelancing business. 'How do you know it's not a scam?' she asked me. That stopped me in my tracks. I'd recognized the hard sell as soon as it started—and had even anticipated it. I scheduled the call before another appointment so I'd have a good reason to hang up. But I'd still been tempted. After a moment's thought, I was able to articulate how I knew I wasn't being scammed. This company is offering to do something real that I could certainly do myself—identify and contact potential clients. The company isn't scamming me; they're just using high-pressure sales techniques. But my friend's question was an excellent reminder of how easy it is to fall victim to investment scams, whether you're investing in your business or your nest egg. That's why it's so important to understand what investment scams look like and how to recognize them. Nothing new under the sun While the methods scammers use to reach their targets are constantly changing and evolving, the actual scams have remained basically the same since the first prehistoric cave dweller received an email from a deposed Nigerian prince. Even 'new' investment scams, like Sam Bankman-Fried's cryptocurrency fraud and whatever the hell NFTs claimed to do, prey on reliable human frailties that don't change—like assuming we don't need to understand an investment to profit from it. That's why most investment fraud is just repackaged versions of the same old scams. These might include: Ponzi schemes A century ago, Boston con artist Charles Ponzi promised investors a 50% return within 45 days on an investment in international mail coupons. At the heart of every Ponzi scheme is the promise of high returns with little to no risk. Of course, there wasn't really an investment. Instead, Ponzi continued to gather new investors, using their money to pay the 'returns' to the original investors. This is the other hallmark of a Ponzi scheme—the scammer must constantly bring on new investors to satisfy the older investors. Ponzi's international mail coupon scheme fell apart when postal inspectors grew suspicious and his investors cashed out in large numbers. Ponzi schemes are inherently unstable and will inevitably disintegrate, either when investors cash out or when the scammer can no longer bring in new investors. But they continue to crop up, as Bernie Madoff reminded the world in 2008. You can generally recognize a Ponzi scheme when it seems too good to be true, when the returns are too consistent, and when those returns arrive nearly overnight. Those all feel great, which is how Ponzi schemes override your logic. This is why it's always a good idea to embrace your financial paranoia. Pump-and-dump schemes The aim of a pump-and-dump scheme is to manipulate the price of a stock in order to profit. Under this scheme, scammers purchase shares of a company at a low price, then start aggressively promoting the stock—pumping it—to encourage investors to buy in. This inflates the price of the stock. At that point, the scammers sell off their shares—dumping the stock—profiting off the unnaturally high price. This leaves the investors holding stocks they paid too much money for. Typically, pump-and-dump schemes work with penny stocks on little-known exchanges and the scammers engage in high-pressure tactics to get you to invest now. If you've never heard of the stock or the exchange it's traded on, and the sales pitch veers from buttering you up ('A smart person like you wouldn't leave this opportunity behind!') to a hostage negotiation ('Come on, do the right thing!'), then you may be facing a pump-and-dump scheme. Even if you have to do the Zoom-call equivalent of locking yourself in the bathroom and escaping out the window, get out of that meeting. Pre-IPO investment scams We all like to imagine where our bank account would be if we'd been one of the initial investors in Apple, which is why it's easy to fall victim to a pre-IPO investment scam. These fraudulent offers give you the opportunity to purchase a stake in an emerging company before its initial public offering, or IPO, and they will often compare this startup to an established company so you'll get dollar signs in your eyes. Who wouldn't want to get in on the ground floor of the next Amazon? Like pump-and-dump schemes, pre-IPO scams commonly include high-pressure sales tactics. The fraudsters want your money as quickly as possible and they don't want you to have time to think more deeply about their offer. The other red flag for pre-IPO scams is how you are contacted. These scammers often rely on cold-calling potential investors and social media solicitations (because that's really how the biggest companies in the world raised their capital, right?). Taking a moment to think through the weirdness of getting contacted out of the blue for this once-in-a-lifetime opportunity! can help you resist the temptation to invest. Affinity scams Scammers know that you're likely to lower your guard among your community, so the bastards exploit that. Affinity scams target members of affiliated groups, such as religious communities, military members, or other tight-knit circles. The fraudster either is a member of the group or poses as one. By earning the trust of a respected leader, who spreads the word about the investment scheme, the scammer is able to convince the group to invest. These scams can be some of the most difficult to identify, since the scammer is exploiting the group's social capital for their own gain, especially if they have hoodwinked a well-regarded leader. The best way to fight affinity scams is to ask a lot of questions. Legitimate investment professionals are happy to field questions and help you understand where your money is going. Scammers will pressure you to shut up—and will use group dynamics to enforce your silence. And that faux-friendly insistence on silence after you've asked questions is the best indicator of an affinity scam. Know the signs of a scam Knowing what scams exist doesn't make you immune to them. Madoff's victim list included a number of brilliant minds and tough cookies —which just proves that fraud can happen to anyone. Understanding the specific psychological tools scammers use can help you give yourself enough room to think before you act. Urgency: There is no legitimate investment that can't wait 24 hours. You can feel confident about walking away from anyone who pressures you to make an immediate investment decision. Ambiguity: Even if you are an investment noob, you need to understand what your money will be used for. If you're more confused after getting a string of smart-sounding gobbledygook or if you've been told not to worry your pretty little head, don't invest. Guarantees: There are no guarantees in investing. Give the hairy eyeball to anyone who tells you differently. Reaching out to you: Cold-calling is the last refuge of the desperate. (So says the writer who sometimes needs to find people to interview.) If someone is reaching out to you with an exciting opportunity, you need to wonder why. Not today, scammer Remembering that scamming techniques don't really change over time can help you protect yourself. That's because all scams, from Ponzi schemes to pump-and-dumps to pre-IPO investments to affinity scams, aim to get your emotion to override your logic. Of course, it can be difficult to recognize when your lizard brain is driving. That's why you can train yourself to look for the classic signs of an investment scam, including urgency, ambiguity, guarantees, and cold-calling. Before you sign on to any investment, do some basic research, starting with a simple Google search of the opportunity. The Federal Trade Commission and Securities and Exchange Commission provide information on common and emerging trends in investment scams, and scam victims will often share details of their experiences online. Just searching online for the investment may be enough to identify it as a scam. If you're still not sure, consider whether you're feeling pressured to invest. Take at least 24 hours (but consider taking longer) to do more digging into the investment and talking with knowledgeable friends and colleagues before deciding.
Yahoo
24-05-2025
- Business
- Yahoo
Tennesseans losing millions of dollars through investment scams
NASHVILLE, Tenn. (WKRN) — Tennesseans lost more than $23 million to investment scams during the first quarter of 2025, according to the Federal Trade Commission. The Better Business Bureau said this trend has increased drastically over the last year. Plenty of scams are common knowledge, like imposter scams and romance scams. 'Folks are still looking for love in all the wrong places,' Robyn Householder, president and CEO of the BBB of Middle Tennessee and Southern Kentucky, said. However, scammers are finding new ways to access wallets. Report: Tennesseans lost millions in cryptocurrency scams last year, per FBI 'Investment scams, and specific to cryptocurrency scams, have really grown dramatically over the last 12 months,' Householder said. According to Householder, while older adults are more likely to be victims of scams in general, the BBB is seeing more younger adults fall victim to investment scams. 'They have a little less to invest, so they're not going to lose as much money, but they lose more often,' Householder said. She said people who are contacted by scammers are often lured in with the promise of quick and large returns on a low investment of a couple thousand dollars. ⏩ 'Unfortunately, not enough people know how it works, and so they're investing in schemes with fraudsters. Their average loss is about $5,000,' Householder said. According to Householder, while folks most likely won't get their money back, it's important to report these scams to the BBB to help others avoid becoming victims. 'It's not just shared with us but it's shared not only throughout the country with other BBBs, but also other government agencies, like the Attorney General's office, the Federal Trade Commission, so that they can hopefully continue to work on putting a stop to some of this craziness,' Householder said. If you want to look up a scam or report a scam to the BBB, follow this link. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Daily Mail
17-05-2025
- Business
- Daily Mail
Investors lose millions as scammers clone legitimate firms - and AI is making the ruse more convincing
Investors are being warned over a wave of cloning fraud which aims to trick them into handing over huge sums of cash. In the second half of 2024, there were 478 reports of investment management firms being impersonated by scammers in order to steal money from investors, according to the Investment Association. Almost a quarter, 23 per cent, of these scam attempts were successful and consumers lost £2.7million as a result. These scams see fraudsters masquerading as legitimate companies by creating duplicate websites, false emails or Whatsapp groups using a firm's brand and logo in order to steal money from unsuspecting victims. The trade body warned that potential investors need to be wary of scam attempts. It said investors should take the time to consider if something could be fraud, challenge any requests that might be a potential scam, and contact their investment provider immediately if they think they might have been scammed. Adrian Hood, regulatory and financial crime expert at the IA, said: 'Criminals will use a variety of means to trick people into parting with their money, whether that's impersonating genuine investment managers, stealing card details, or fraudulently logging into a person's account. 'That's why we're urging consumers to stay vigilant. With cloning scams topping the list of threats, consumers should double check whether websites or emails are legitimate before transferring any money.' While the number of reported cloning scams in the second half of 2024 was lower than the 536 attempts reported in the first half of the year, the total for 2024 was 1,014, well above the 645 reports made in 2023. In 2022, just 212 cloning scam attempts were reported. Hood added: 'The growth of AI is likely to see increasingly sophisticated scams, with criminals better able to mimic legitimate firms.' Action Fraud received 25,843 reports related to investment fraud in 2024, and says more than £649million was lost as a result of these. While cloning scams appear to be the most prevalent of schemes targeting investors, the trade body also warned against account takeovers, with 132 instances of these reported in the second half. Scammers use victims' information to change address or payment details of an account in order to take investment gains for themselves. There were also 17 reports during the period of fraudsters using stolen card details to make investments. In total, the Investment Association said 179 fraud attempts were successful with investors losing an initial £5.4million. Just £1.7million of this was recovered. However, these losses had decreased 29 per cent from the first half's losses of £7.6million, while the value of the losses prevented increased to £11.9million, some 17 per cent higher than the £10.2million of losses prevented in the first half.
New York Times
06-05-2025
- Business
- New York Times
There Are Conflicts of Interest. And Then There's Trump.
On Sept. 9, 2024, the F.B.I.'s Criminal Investigative Division reported that 'as the use of cryptocurrency in the global financial system continues to grow, so too does its use by criminal actors.' The exploitation of cryptocurrency, according to the F.B.I., 'was most pervasive in investment scams, where losses accounted for almost 71 percent of all losses related to cryptocurrency.' Seven days later, Donald Trump declared on X: 'Crypto is one of those things we have to do. Whether we like it or not, I have to do it.' In the same tweet, posted a month and a half before the election, Trump promoted his new venture World Liberty Financial Inc. Back in the White House, Trump has discovered that what he criticized as 'not money' six years ago could now serve as an ideal way to profit from his presidency. Estimates of the value of Trump's crypto assets vary widely, from $2.9 billion by Fortune to $6.2 billion by Forbes, although Forbes acknowledged the figure is 'a dubious estimate given it's based on supply not yet on the market.' And as Trump said, it's not, strictly speaking, money. Eswar Prasad, a professor of economics at Cornell and the author of 'The Future of Money: How the Digital Revolution Is Transforming Currencies and Finance,' who has written extensively about digital currencies, contended in an email that: It is quite remarkable for any government official, let alone the leader of the free world, to create and promote a vehicle for rampant speculation and to directly profit from it. Trump seems to show scarce restraint in his willingness to use the levers of power to enrich his family and close associates with little accountability or transparency. Trump's launch of two 'meme coins,' $Trump and $Melania, Prasad continued, 'take conflicts of interest to an altogether new level, especially given Trump's official position and his control of the entire financial regulatory apparatus.'
