Americans lost a shocking $5.7 billion to investment scams in 2024, per the Federal Trade Commission (FTC). These common scams trick victims into sending money by promising big returns on investments tied to the latest get-rich-quick fad. According to the FTC, the average victim lost more than $9,000.
Fraudulent investment schemes are a growing threat to the safety of American consumers. Specialists stress protective measures and vigilance to prevent becoming the next target of these cons. This blog post will unpack the specifics of these fraudulent activities and arm you with information to better defend yourself against them.
The FTC recently announced that a shocking 79% of those who reported investment scams lost money. This alarming percentage simply highlights the sophistication and success of these scams and the need for evermore vigilance. As the FTC explains, one common type of investment scam is the one that promises you big payouts. Fraudsters often target the latest exciting new profit-making opportunities.
John Breyault, the National Consumers League’s vice president of public policy, telecommunications, and fraud, emphasized the growing threat of investment scams. He added that there’s an urgent need for increased consumer awareness and greater protection measures.
Investment scams are becoming a really huge problem for consumers. - John Breyault, the National Consumers League's vice president of public policy, telecommunications, and fraud
Breyault listed three red flags of fraud that anyone can use to ensure they don’t get scammed. Scammers almost always ask you to pay using specific or weird methods. They further aim to isolate victims so they can’t seek counsel from anyone else. Lastly, they issue a misleading sense of urgency in order to coerce victims into rushing to respond.
Scammers often ask victims to pay in specific or unusual ways. - John Breyault
Scammers will try to isolate victims so they don't tell other people about the circumstances who might alert them that it's a scam. - John Breyault
Be wary of any pitch that has a form of urgency attached to it. - John Breyault
The FTC cautions that illegitimate contractors often require payment in cryptocurrency, wire transfers via companies such as MoneyGram or Western Union, payment apps, or gift cards. Keep your eyes open and beware of these tricks!
Scammers want you to act before you have time to think. - FTC
That sense of urgency is manufactured by scammers through intimidation.
They might threaten to arrest you, sue you, take away your driver's or business license, or deport you. They might say your computer is about to be corrupted. - FTC
Investment scams are often known as “pig-butchering” scams—a name derived from raising and fattening an animal before slaughter. These so-called romance scams typically start with cultivating a relationship, over weeks or even months, before swindling targets. As noted by the Council on Foreign Relations, transnational organized crime networks have established centers for scam operations across Southeast Asia. Yet these centers exist in countries like Cambodia, Laos, and Myanmar.
University of Texas at Austin researchers discovered that criminal networks often leverage cryptocurrency in international pig-butchering scams. This approach enables them to move massive sums of money faster, cheaper and with a far lower risk of detection.
Though there’s no guaranteed way to avoid fraud altogether, Breyault offers some advice on what consumers can do to lower their chances of falling victim. In particular he said, be questioning, be skeptical, ask questions. Seeking the counsel of trusted advisors can further protect people from becoming scam victims.
While there's no "silver bullet" to protect against fraud, there are ways consumers can reduce their risk. - John Breyault
