BBB – September 6, 2024
Investment scams can lead to major losses for consumers
If you were offered the chance to triple an investment in two months, would you take it? It might be hard to say no, but it might really be too good to be true. Since 2020, the BBB has received more than 4,000 reports from consumers about investment scams, many of which involved cryptocurrency or a new take on romance fraud.
How this scam works
Reports to BBB show that investment scams often take the form of long-term confidence scams, where fraudsters pursue romantic and platonic relationships to gain the trust of their targets. That has caused losses to rise, with the median report increasing from $1,000 in 2021 to almost $6,000 this year.
An increasingly common tactic is revealed by an experience of a man from California who told BBB he was traveling through France when he matched on a dating app with a woman calling herself “Mei.” The two talked for months and even made video calls as they got to know one another. Eventually, she brought up cryptocurrency investing as a hobby of hers and convinced him to join her.
The two continued to chat on the phone for months, and he invested nearly $1,000. One day, when the man went to check the application he used for investing, it appeared to be down. When he contacted Mei, she rebuffed him and disappeared.
In another example, one woman in Connecticut reported to BBB about a cryptocurrency scam she encountered on social media. Unbeknownst to her, a friend’s social media account was hacked.
The scammer, posing as the friend, said they ran an automated training bot – a program used to trade cryptocurrency automatically according to a user’s guidelines – with guaranteed returns. The account appeared to grow and grow, and eventually she wanted to withdraw some of it. The scammer, still posing as the friend, said they wanted a 20% commission, which the woman paid. Afterward, they disappeared, and she lost $84,000 in the process
How to avoid investment scams
Know the common warning signs and red flags of cryptocurrency investment scams:
- Deals involving little-known cryptocurrencies
- Requests to share your cryptocurrency wallet with someone you don’t trust completely
- Strategies offering guaranteed returns
- An investment that takes little effort or time to pull off
- Someone offers their secret strategy or says not to research their claims
- Too-good-to-be-true claims
- A stranger suddenly wants to befriend you
To help consumers and businesses understand investment scams, the BBB’s International Investigations Initiative combed through thousands of reports to BBB Scam Tracker, talked with experts, and investigated the newest trends to compile the III’s newest study.
The study combines consumer stories and examines how scammers convince their targets to hand over thousands of dollars. It also shows how a rise in organized crime based in southeast Asia has helped perpetuate this global scam.
Read the full investment scams study at: https://www.bbb.org/all/scamstudies/investment_scam_study/investment_scam_study.
For more information
Read 10 tips on how to avoid scams at: https://www.bbb.org/article/tips/8767-bbb-tips-10-steps-to-avoid-scams?utm_source=newsletter&utm_medium=email&utm_content=10%20tips%20on%20how%20to%20avoid%20scams&utm_campaign=scam-alert.
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