Investment scams continue to grow in both frequency and sophistication. These scams often promise high returns with little or no risk, using convincing stories and professional-looking websites to lure victims into handing over their money.

If an investment opportunity sounds too good to be true, it usually is.

What Is an Investment Scam?

Investment fraud occurs when someone is tricked into investing money in fake, misleading or extremely high-risk opportunities. Scammers often pose as investment experts and promote opportunities with guaranteed profits, especially involving cryptocurrency.

A common scenario looks like this:

You’re contacted by someone claiming to be a knowledgeable investor. They promise impressive returns if you invest in cryptocurrency and direct you to a website that appears legitimate. The site may even show profits accumulating in your account. However, when you try to withdraw your money, you’re suddenly blocked or told you must first pay additional fees or taxes. The money never arrives because the investment was never real.

This is a scam.

Red Flag Scenarios

Be on high alert if any of the following situations occur:

• You receive a request for payment to recover, release or unlock your funds. These are impersonation schemes and are a common follow-up to investment scams.
• Someone you met online, romantically or otherwise, begins asking for money or encouraging you to invest in cryptocurrency.
• You are asked to pay upfront “taxes” or “fees” before gaining access to your investment earnings.
• Someone else sets up the investment account for you, and you do not have direct access to account statements or online documentation.

Common Warning Signs of Investment Scams

Investment scams often share similar characteristics:

• Promises of unusually high returns with little or no risk
• Pressure to act quickly or claims that the opportunity is time-limited
• Unsolicited offers received via email, text messages, phone calls or social media
• Requests for secrecy or instructions not to discuss the investment with others
• Being told to invest only using cryptocurrency, gift cards or wire transfers
• Difficulty withdrawing your money or unexpected fees to access your funds

These warning signs should not be ignored, even if the person seems professional, knowledgeable or trustworthy.

Why Bitcoin and Cryptocurrency ATMs Are Especially Risky

Bitcoin and cryptocurrency ATMs are frequently used in scams because they offer criminals anonymity and limited oversight. Cryptocurrency transactions are difficult to trace, lack the consumer protections of credit and debit cards, and are usually irreversible.

Once funds are transferred through a cryptocurrency ATM, recovering the money is extremely difficult, which makes these machines a popular tool for scammers and a high-risk option for members.

How to Protect Yourself

You can reduce your risk of falling victim to an investment scam by following these tips:

• Understand the risks before investing and avoid opportunities that promise guaranteed returns
• Do not rush. Scammers rely on urgency and pressure tactics
• Research both the individual and the investment opportunity independently
• Read all agreements carefully and question anything that feels unclear
• Speak with a trusted financial professional before investing or transferring funds

If someone discourages you from getting advice or insists you act immediately, step away.

What To Do If You’re Scammed

If you believe you’ve fallen victim to an investment scam:

1. File a report with the Federal Trade Commission at ftc.gov
2. Report the incident to your local police department
3. Contact your financial institution immediately so action can be taken as quickly as possible

The sooner the incident is reported, the better the chances of limiting the damage.

Investment scams evolve constantly, but awareness is your best defense. When in doubt, pause, verify and ask questions before making any financial decisions.

If something doesn’t feel right, trust your instincts and reach out for help. Our Consumers Fraud Team is here to help, plus you can find further resources and fraud education on our website.

Call our member service center at 800.991.2221, and we can provide support.

 

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