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Investment Scams

4 minute read

Promises of guaranteed high returns.

How It Works

  1. You see an opportunity promising high returns with little/no risk
  2. Early “investors” show off their earnings (they’re fake or early recruits)
  3. You invest and may see “returns” on paper
  4. When you try to withdraw, there are problems
  5. Eventually the scammer disappears with everyone’s money

This is often called a “Ponzi scheme”—early investors are paid with later investors’ money until it all collapses.

What It Looks Like

Social media:

I made $10,000 this week trading crypto! DM me to learn my strategy 🚀💰📈

Just quit my job thanks to this investment app. You need to try it!

Passive income changed my life. Comment “INFO” and I’ll share how.

Investment “platforms”:

  • Slick website showing your “balance” growing
  • But withdrawal is always delayed or blocked
  • Fees, minimums, or “processing issues” prevent you from getting your money

Pyramid/MLM schemes:

  • “Recruit friends and earn passive income!”
  • Your earnings depend mostly on recruiting others
  • Products (if any) are just cover for the recruitment scheme

Red Flags

  • Guaranteed returns — No legitimate investment guarantees returns
  • Very high returns — “10% per month” or “double your money” claims
  • Low or no risk — All investments have risk
  • Pressure to act fast — “Limited time opportunity”
  • Unregistered investments — Not registered with SEC
  • Can’t withdraw — Fees, minimum thresholds, processing delays
  • Complex strategy — Can’t clearly explain how it makes money
  • Paid in cryptocurrency — Very hard to recover
  • Recruiting required — Most “earnings” come from recruiting others

Common Investment Scam Types

Crypto scams

  • “Revolutionary new coin” or “ground floor opportunity”
  • Fake trading platforms that show fake profits
  • “Crypto experts” offering to trade for you

Forex/Trading scams

  • Claims of guaranteed profits from currency trading
  • Fake trading bots or signals

Ponzi schemes

  • Consistent returns regardless of market conditions
  • Returns paid from new investor money

Pyramid schemes

  • Must recruit to earn
  • Product is secondary to recruitment
  • Only early participants profit

“Pig butchering” scams

  • Build relationship first (often romantic)
  • Then introduce “investment opportunity”
  • Combination of romance and investment scam

How to Protect Yourself

The golden rule

If it sounds too good to be true, it is.

No legitimate investment offers guaranteed high returns with no risk.

Verify before investing

  • Check SEC.gov — Is the investment registered?
  • Check FINRA BrokerCheck — Is the broker/adviser legitimate?
  • Search “[investment name] scam” — What do others say?

Research extensively

  • Understand how it makes money
  • Verify the company exists and has history
  • Be skeptical of pressure to decide quickly

Be skeptical of social media

  • Those “success stories” are often fake or paid
  • Screenshots of profits can be easily faked
  • Real investors don’t recruit on Instagram

Only invest what you can afford to lose

  • Never invest emergency savings
  • Never borrow money to invest
  • Never invest money you need for bills

Warning Phrases

When you hear these, walk away:

  • “Guaranteed profit”
  • “Risk-free investment”
  • “Double your money”
  • “Limited time opportunity”
  • “Everyone is making money”
  • “You just need to recruit”
  • “Can’t lose”
  • “Exclusive opportunity”

If You’ve Lost Money

  1. Stop investing immediately
  2. Document everything:
    • Screenshots of website, messages, transactions
    • Names and contact information used
    • How you found the “opportunity”
  3. Report to:

  4. Consult a lawyer about recovery options

  5. Be wary of “recovery” scams
    • Scammers sometimes return offering to “help recover” lost money
    • They charge a fee and then disappear too

Full steps: I think I was scammed →