BBB investment scam reports reach three-year high. Here’s what to look for

Since 2020, investment scam reports to BBB Scam Tracker totaled more than 4,000, reaching a three-year high in 2023.

Scammers blended aspects of various scams, including romance and cryptocurrency, to trick targets into handing over large sums of money.

“Reports to Better Business Bureau 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,” said Steve J. Bernas, president and CEO of BBB. “That has caused losses to rise, with the median report increasing from $1,000 in 2021 to almost $6,000 this year.”

The BBB investigation examines patterns of reports, reviews the amount of money lost and shares stories from those caught up in the scams so the public can avoid them.

Key findings

• Investment scammers target people throughout North America, eyeing targets with existing investments and retirement accounts.

• Fraudsters use the dense and sometimes misunderstood world of cryptocurrency to evade suspicion and lure people in.

• These scams can go on for months at a time before being detected, allowing scammers to steal thousands of dollars.

• These scams largely originate in Southeast Asia due to organized crime, but a growing response to fraud in this region has led fraudsters to move their scam operations to other countries.

• Many low-level scammers are victims of forced labor, complicating the problem of prosecuting those involved.

There were 3,352 investment scam reports across North America between 2021 and 2023, according to BBB Scam Tracker. The Federal Trade Commission’s Consumer Sentinel Network reported 301,840 investment scams during that same period.

Among the cases reported to BBB was a Schaumburg man who lost $10,578. It started when he received a message on WhatsApp promising help in investing. The scammers said they were giving expert advice on crypto trading and promised returns from 20% to 30%. He paid by bitcoin, and watched his investments go up. But when he tried to withdraw his money, the scammers told him he had to pay fees. He then realized it was a scam, the BBB reports.

Another involved an Elk Grove Village woman who met a man on Tinder who promised to teach her how to invest her money. She put in $500, and followed his directions. When she did, her accounts grew into the thousands. But when she tried to withdraw some money, the man recommended she first send money to another account, which turned out to be controlled by the scammer. She never received any money, the BBB reports.

The BBB warns of red flags with investment scams:

• 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

• Someone says not to research their claims

• Too-good-to-be-true claims

• A stranger suddenly wants to befriend you.

Tips to avoid scams

• Be very wary of buzz words. Certain phrases should raise a red flag for an investment opportunity. Don’t believe anything that is “guaranteed” to do well, or that offers low or no risk with a high return.

• The investment industry is highly regulated. Be wary if investments are unregistered with the SEC or other investment industry regulators. Also, check licensing for the sellers.

• High-pressure sales tactics are also a big warning sign. Many risky investments are sold at “opportunity meetings” or other high-pressure situations. A similar tactic is the use of a “shill,” a decoy who offers a fictional success story but is really being paid by the promoter of the plan. Some pitches leverage a shared connection such as the same ethnicity, church, profession, etc. Be on the lookout for attempts to prey on an affinity.

• How do you make money? If you find that the reward for recruiting new distributors and selling them products and training materials is more than the reward for selling products, you may be dealing with a pyramid scheme.

For more information visit BBB.org to check out a business or register a complaint, BBB Scam Tracker to report a scam and for more on this and other scams.