Did you hear about an investment opportunity from a friend or someone in a group or community you’re a part of? Before you hand over any money, make sure you’re not getting into an investment scam. Here’s how.
One way investment scammers work is by using your community connections or claiming to have similar values to gain your trust. It can happen online, through social media, or in person. To get you to invest, they’ll promise high returns with little to no risk and lie about how much money others have already made investing with them in forex trading, stocks, cryptocurrency, or something else. After you invest, they’ll often tell you your investments are doing well and make you think you’re making money. The reality? The investment isn’t real or is extremely high-risk, and you end up losing all your money.
To avoid an investment scam:
- Look for information about the reputation of the investment company, its officials, and its promoters. Search online with their name plus words like “review,” “scam,” or “complaint.” Go through several pages of search results.
- Check for licenses and registrations. Check out the background, including registration or license status, of anyone recommending or selling an investment using the free simple search tool on Investor.gov. For precious metals and coin investments, check with the CFTC database.
- Know that investments always involve risk. Don’t trust anyone who plays down the risk of an investment or who acts like risk disclosures are just a formality or something you don’t need to worry about. Scammers want you to think their opportunity is risk-free, but it’s not.
Learn more about affinity fraud — where scammers are or pretend to be part of a group — at Investor.gov, a U.S. Securities and Exchange Commission (SEC) website.
And report investment scams to the FTC at ReportFraud.ftc.gov.