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 figure highlights how easy it can be to fall prey to a scammer.
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 company that was supposedly generating double-digit returns for ordinary investors. The friend said he had already seen good results and even showed screenshots of his growing balance.
Trusting his friend was enough. Michael transferred nearly $180,000 (all of his savings) to the company, with little further investigation. A few months later, the company announced “temporary liquidity problems.” At the end of the year, the chief executive was in court abroad and clients learned that the company had funneled money into unregulated, high-risk investments before collapsing. Michael and his friend lost everything.
Investment scams convince unsuspecting victims that they can make big profits from a new opportunity that few know about. And scammers are getting better at making these schemes look legitimate (2), as the FTC warns.
“The data we released 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 those trends and working hard to protect the American people from fraud (1).”
While these schemes take different forms, the general process is similar: they get your attention through ads, free events, or financial advice. They will often tell you that you will make a lot of money and may present the investment as something new or unique. Many scammers use stories from “real” people to show you how much you could earn by showing off their lavish lifestyles.
Actual investment may vary. Sometimes these are currencies, cryptocurrencies, real estate or investments in international companies. Scammers often promise high returns and may even show you a dashboard of your money growth, usually to encourage you to increase your investment (2).
Read more: The average net worth of Americans is a staggering $620,654. But it almost doesn’t mean anything. Here’s the number that counts (and how to make it fire)
In the end, however, your money runs out and you have to pick up the pieces. Worse yet, recovering your investment is often impossible.
Investment scams don’t just happen to careless or uninformed people. They often take advantage of trust, such as a friend’s recommendation, a community connection, or a professional-looking website. And once money is transferred, especially across borders, getting it back becomes extremely difficult.
That is why prevention is essential. These are the signs that an “opportunity” may not be what it seems:
-
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 carry some level of risk.
-
Little 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.
-
Promise a “secret” method or a proven system: Anyone who promises a secret method or an easy way to make money without much time or risk is probably a scammer.
-
High pressure sales tactics: If someone pressures you to act quickly or discourages you from taking the time to investigate, they are likely a scammer (2).
Artificial intelligence tools are making it easier than ever for scammers to lure unsuspecting victims into their schemes by making their websites, emails and other communications appear sophisticated and legitimate. If you’re unsure whether an investment opportunity is too good to be true, take the time to do your research. Verify claims independently and research the company name along with terms such as “scam” or “fraud.” Talk to others in your trusted circle, such as your family, to see if they spot any gaps that you may have overlooked.
Before handing over money, check to see if the person or company is registered with the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC).
These agencies supervise investment professionals, enforce disclosure rules, and maintain public databases of legitimate entities.
If a company is not registered when it should be, it is a major red flag: regulated companies must follow strict standards, submit audited financial statements, and allow federal agencies to monitor their activities. Scammers often avoid registration precisely because they do not want to be vetted.
If you fall for a scam, report it quickly. Investment fraud should be reported to the FTC (3) or the SEC (4). Fraud involving precious metals or commodities must be reported to the CFTC (5). If your identity is compromised, report it at IdentityTheft.gov (6).
Investment scams are devastating because they combine financial losses with emotional consequences, especially when a trusted friend or family member recommended the investment. Unfortunately, once money leaves the country or lands in an unregulated investment, recovery is rare.
But reporting the scam, warning others, and strengthening your own financial security controls can prevent future damage. As losses continue to mount across the country, awareness and skepticism remain the strongest defenses investors like Michael have, so use them early and often to avoid becoming a statistic.
We rely only on verified sources and credible third-party reports. For more information, see our editorial guidelines and ethics.
Federal Trade Commission (1); FTC Consumer Advisory (2); Report fraud to the FTC (3); SEC (4); CFTC (5); FTC Identity Theft (6)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
