Investment Scams: Red Flags and How to Check Before You Invest
Many investment scams start with a friendly message, an ad or a “tip” from someone you’ve never met. They promise easy money, and they are built to make you feel you must act fast.
The FTC reports that people told it they lost $4.6 billion to investment scams in 2023, more than any other kind of scam. AARP reports that people 50 and older reported more than $900 million in investment-related fraud to the FTC that year. Anyone can be fooled. These scams are designed by professionals.
Common Red Flags
- Pressure to act fast. You’re told space is limited or the deal ends soon.
- Big or guaranteed returns. No real investment is risk-free. A “hot new” opportunity such as cryptocurrency, or a “proven system,” deserves extra caution.
- Plans you can’t understand. If no one can explain how the money is made, don’t hand over yours.
- Fake proof. Invented success stories, or websites that show made-up profits.
- Trouble getting money out. Repeated excuses or new fees when you try to withdraw.
- Advice to move your retirement savings because a crash is coming.
How to Check Before You Invest
- Slow down. Take your time, and talk it over with someone you trust who isn’t involved.
- Search the company or program name with words like “scam,” “fraud” or “complaint.”
- Look up the person and firm on Investor.gov, FINRA BrokerCheck (brokercheck.finra.org) or the SEC adviser database (adviserinfo.sec.gov).
- Never invest based only on claims, newsletters or online reviews.
- Ask yourself: Do I understand this, and could I afford to lose this money?
Never pay with gift cards, wire transfers or a crypto machine, and never share bank logins or your Social Security number with someone who contacted you first.
If You Already Sent Money
You are not foolish, and you are not alone. Act quickly:
- Call your bank or card company right away and ask whether the payment can be stopped.
- Report it at ReportFraud.ftc.gov.
- Call the National Elder Fraud Hotline at 1-833-FRAUD-11 (1-833-372-8311).
- Be wary of anyone who offers to “recover” your money for a fee. That is often a second scam.
More on Seniors Tips
- Bitcoin ATM Scams: Why No One Legitimate Will Ask You to Pay This Way
- Paid a Scammer? What to Do Right Away
