Investment scams are on the rise in the US, with FTC data showing a 25% increase in losses between 2023 and 2024 (1). Consumers reported losing $5.7 billion to these scams last year — and for many Americans, that number highlights how easy it can be to fall for a fraudster’s schemes.
Consider someone like Michael, a 46-year-old warehouse supervisor in Ohio. Last year, a close friend urged him to invest his life savings in a foreign firm that was supposedly generating double-digit returns for ordinary investors. The friend said he’s already seen strong results and even showed screenshots of his growing balance.
Trusting his friend was enough. Michael wired nearly $180,000—his entire nest egg—to the firm with little further investigation. A few months later, the company announced “temporary liquidity problems”. By the end of the year, the CEO was in court overseas and clients learned that the firm had funneled money into high-risk, unregulated investments before it collapsed. Michael and his friend lost everything.
Investment scams convince unsuspecting victims that they can earn big profits with a new opportunity that few others know about. And scammers are getting better at making these schemes look legitimate (2), as the FTC warns.
“The data we’re releasing today shows that scammers’ tactics are constantly evolving,” said Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection. “The FTC is closely monitoring these trends and working hard to protect the American people from fraud (1).”
Although these schemes take different forms, the general process is similar: they attract your attention through advertisements, free events or financial advice. They will often say that you will make a lot of money and may present the investment as something new or unique. Many scammers use the stories of “real” people to show you how much you could earn by showing off their lavish lifestyle.
Actual investment may vary. Sometimes it is coins, cryptocurrencies, real estate or investments in international companies. Scammers often promise big returns and may even show you a dashboard of your growing money, usually to encourage you to increase your investment (2).
Read more: The average net worth of Americans is a surprising $620,654. But it means almost nothing. Here’s the number that matters (and how to make it skyrocket)
Eventually, though, your money is gone and you’re left to pick up the pieces. Even worse, the recovery of the investment is often impossible.
Investment scams don’t just happen to people who are careless or uninformed. They are often based on trust, such as a friend’s recommendation, a community connection, or a professional-looking website. And once money is transferred, especially across borders, recovering it becomes extremely difficult.
That is why prevention is essential. Here are the signs that an “opportunity” may not be what it seems:
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Guaranteed results: Scammers promise big profits, maybe even enough to quit your job and live a life of luxury. It is important to remember that all investments involve some level of risk.
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Some initial information about the investment: Before investing money, make sure you understand where your money is going. Ask questions and get the details in writing.
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It promises a “secret” method or proven system: Anyone who promises a secret method or an easy way to make money without much time or risk is probably a scammer.
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High Pressure Sales Tactics: If someone pressures you to act quickly or discourages you from taking the time to do your research, they’re probably a scammer (2).
AI tools make it easier than ever for scammers to lure unsuspecting victims into their schemes by making websites, emails and other communications appear sophisticated and legitimate. If you’re not sure if an investment opportunity is too good to be true, take the time to do your research. Verify the claims independently and look for the company name next to terms like “scam” or “fraud.” Talk to others in your trusted circle, such as family, to see if they notice any gaps you might have missed.
Before handing over money, check to see if the person or firm is registered with the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC).
These agencies oversee investment professionals, enforce disclosure rules, and maintain public databases of legitimate entities.
If a company isn’t registered when it should be, that’s a major warning sign: Regulated firms must follow strict standards, submit audited financial reports and allow federal agencies to oversee their activities. Fraudsters often avoid registration precisely because they don’t want control.
If you fall for a scam, report it quickly. Investment fraud should be reported to the FTC (3) or SEC (4). Precious metals or commodity fraud should be reported to the CFTC (5). If your identity is compromised, report it to IdentityTheft.gov (6).
Investment scams are devastating because they combine financial loss with emotional consequences – especially when a trusted friend or family member recommended the investment. Unfortunately, once the money leaves the country or ends up in an unregulated investment, recovery is rare.
But reporting the scam, warning others, and tightening your own financial safety checks can prevent future damage. As losses continue to mount nationwide, awareness and skepticism remain the strongest defenses investors like Michael have, so use them early and often to avoid becoming a statistic.
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FTC (1); FTC Consumer Tips (2); FTC Fraud Reporting (3); SEC (4); CFTC (5); FTC Identity Theft (6)
This article provides information only and should not be construed as advice. Offered without warranty of any kind.
