Where there’s an investor seeking to make more money, there’s a scammer to take advantage of that investor. Investment schemes, due to their promises of returns and risky nature, are prime targets for a number of different schemes that promise victims fabulous returns only to pay no dividends. In this article, we’ll be looking at common investment scams and how to spot them.
Investment Scams to Beware of
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Below we have a list of scams that might take different guises, but have the same rot underneath. We’ll also show you how to spot an investment scam in each case:
Gold Scam
When markets take a dive and depression looms, gold always becomes more valuable due to its certainty. A victim will be offered a fabulous opportunity: a defunct gold mine that isn’t so depleted after all, a public mining company ready to trade stocks, or gold that someone will keep safe for you. However, once they have the victim’s investment, they disappear.
With this type of scam, you need to be careful of wild promises of fabulous returns. Don’t trust overestimated claims without solid and independently verifiable proof. Convincing websites and promises of exclusivity mean nothing without them. Rather, deal with local merchants and trusted investors.
Pig Butchering Scams
This type of scam got its name in China and puts its focus on one victim over many, taking them for all they’re worth. The pig butchering scam is a long game, where the scammer builds up trust through conversation and interaction over months, only then switching things up and telling them of a fabulous investment opportunity.
The key to spotting this scam is staying social media savvy. Never fully trust any friendship made only online, call an unknown number, or join a group chat out of the blue. Never give out banking details or agree to investments without meeting face-to-face.
Pump and Dump Scam
The Pump and Dump scheme relies on the scammer owning a large number of shares of a publicly traded company or stock. They inflate this price through hype and “expertise,” persuading victims to invest to gain fabulous returns as the profit line goes up and up. Once enough are on board, the victims “dump” or sell the shares, take their massive profits, and leave all investors with grossly deflated shares.
Reputation and establishment are important for spotting this scam. Beware of fresh faces promising the moon, with nothing but aggressive sales tactics to back their claims up. Always go with trusted and established companies.
Crypto Scams
There are a lot of ordinary people who don’t know about crypto, and that uncertainty makes them ripe for scamming. It seems that every day, a new cryptocurrency is being announced and hyped up, only for the founders to pull all funds from investors soon after in an act called “rug pulling.”
Other crypto scams might come with a promise of storing a victim’s funds in a crypto wallet for fantastic returns, only to go dark straight afterwards. As with the Pump and Dump scam, beware of unestablished voices clamoring for your investment and promising guaranteed returns. Nothing in crypto is ever that simple.
AI Scams
AI scams aren’t so much a category in themselves, but rely on a tool, in this case, artificial intelligence, to help enhance and add legitimacy to other types of existing scams. Deepfakes of celebrities and well-known CEOs and business moguls are now easy to generate. LLMs generate voice clones or reviews of products that closely mimic these individuals, too.
What’s more, these tools can also enhance fake websites and company branding to make phishing attempts more effective. Don’t believe anything you receive without first researching claims or verifying them through official brands and celebrity accounts. Keep a lookout for any “uncanny valley” material (like images or videos where something seems off) and never follow links to unofficial sites.
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When my sweet old grandmother got caught up in an Amazon gift card scam, I decided then and there that I needed to do whatever I could to inform as many people as possible about the grifters of the world. That’s what I do here – writing about modern scams so you don’t get caught out.
