Investment fraud is on the rise. Here’s how to protect yourself

Investment scams are on the rise, with consumers losing a staggering $5.7 billion in 2024 alone. This marks a 24% increase from the previous year, making it the most common type of fraud reported to the Federal Trade Commission. The lure of big returns from a hot new investment opportunity is often too tempting for unsuspecting victims.

According to the FTC, 79% of individuals who reported falling victim to an investment scam ended up losing money. The average loss per victim was over $9,000, highlighting the devastating impact these scams can have on individuals and their finances. However, it’s important to note that these figures are based on consumer reports, meaning the actual number of individuals affected by investment fraud is likely much higher.

John Breyault, the National Consumers League’s vice president of public policy, telecommunications, and fraud, described investment scams as a growing problem that is plaguing consumers. The rise of artificial intelligence and cryptocurrency has made it easier for scammers to carry out sophisticated schemes that can be difficult to detect.

One common type of investment fraud is known as “pig-butchering” scams, where fraudsters befriend victims through various channels such as text, social media, or dating apps. They then pitch lucrative investment opportunities that promise high returns, often involving virtual assets like cryptocurrency. Once the victim invests their money, the criminals disappear, leaving them with significant financial losses.

The use of deepfakes, manipulated videos that appear real, has made it even harder to identify fraudulent schemes. Organized crime networks have set up scam operations centers in Southeast Asia, employing thousands of people to carry out investment fraud globally. Cryptocurrency is often used to facilitate these scams, allowing criminals to move funds covertly and evade detection.

To protect themselves from falling victim to investment fraud, consumers should be cautious of pitches that create a sense of urgency, require unusual payment methods, or attempt to isolate them from seeking help. By remaining vigilant and following these guidelines, individuals can reduce their risk of becoming targets of fraudulent schemes.

In conclusion, investment fraud poses a significant threat to consumers, highlighting the need for increased awareness and vigilance in the face of sophisticated scams. By staying informed and taking proactive measures to protect themselves, individuals can safeguard their finances and avoid falling prey to fraudulent schemes.