Skip to main content
Security & Scams

Investment Scams

Investment Scams

How they work

You may receive a call or be contacted via social media or email with an offer that is too good to be true and you must act fast! These scammers are smart, friendly, and charming and try and earn your trust so that you will give them money as quickly as possible without asking too many questions.

Investment fraud happens when people try to trick you into investing money. They might want you to invest money in stocks, bonds, notes, commodities, currency, cryptocurrency, or real estate. A scammer may give you fake information about a real investment, or they may make up a fake investment opportunity. Red flags include: guaranteed high returns, low or no risks, invitations to join exclusive investment organizations, the ability to “get in on the ground floor,” and claims of breakthrough technologies.

What you can do

 

  • Verify credentials. Legitimate investment professionals are registered with the Financial Industry Regulatory Authority (FINRA), the Securities and Exchange Commission (SEC), or your state securities or insurance regulator. You can use BrokerCheckTM, a free online tool offered by FINRA, to review a broker’s qualifications, registration, and employment history. BrokerCheck also contains a disclosure section with information about customer disputes, disciplinary events, and certain criminal and financial matters on the broker’s record.
  • Ask for documentation. Stocks, mutual funds, and exchange-traded funds (ETFs) are typically required to have a prospectus, and bonds are required to have an offering circular. If there’s no documentation, the securities may not be registered with the SEC, which usually prevents them from being sold to the public.
  • Share this information with a friend. You may not have experienced this scam but chances are you know someone who has.