The Ohio Attorney General’s Office is cautioning Ohioans about the prevalence of fraudulent investment schemes on social media platforms. Scammers are increasingly using deceptive advertisements and “deepfake” technology to lure investors into high-stakes scams to defraud them of their savings.
Be sure to scrutinize investment advertisements before making any decisions. Most reputable broker-dealers and investment advisers do not post investment advice on social media platforms.
- “Pump and dump” scams. Victims are lured into investment groups and persuaded to invest in cryptocurrencies or low-priced stocks. The scammers advertise, hype and recommend the stock or cryptocurrency purchases, then sell when the price is high – and the victims lose their money. Scam ads often appear on social media featuring recognizable figures but without their permission. The ads often promise exclusive “insider” memberships or “guaranteed” high-return investment tips.
- Confidence scams Fraudsters develop trusting relationships with their victims and persuade them to “invest” using fake investment platforms that drain the victims’ money.
Scammers generally post ads suggesting that investors can make money using an investment platform or strategy. The scammers may offer to “teach” the user how to trade on a fake investing platform or even connect the victim with their own personal adviser, who speaks with the user daily. The scammers then guide their victims to a professional-looking website or app, which is often a clone of a real trading platform.
Once the victims seek to withdraw their profits, they are told they need to pay a commission, tax or other type of fee. Even when victims pay, the scammers give other excuses not to return the money. Once the victim stops paying the fees or making additional investments, the scammers disappear – along with the victim’s investment.
Ohioans should stay vigilant and learn to identify the following red flags:
- Promises of guaranteed returns. No legitimate investment is risk-free or offers a guaranteed return.
- High-pressure tactics. Scammers often suggest that you will “miss out” if you don’t invest immediately.
- Celebrity endorsements. Scammers often use AI-generated images or videos of famous entrepreneurs to lure victims.
- Currency demands. Requests to use hyper-specific payments – such as gift cards, peer-to-peer payment or crypto – should be regarded with suspicion.
- Requests to accept other people’s money. Scammers sometimes ask victims to accept other people’s funds in their bank accounts and convert them to cryptocurrency.
- Platform hopping. Scammers may rask to move the conversation from Facebook to encrypted apps, such as WhatsApp or Telegram.
Before investing, be sure to conduct some independent research:
- Verify credentials. Use FINRA’s BrokerCheck to confirm whether a professional is registered. Be aware, though, that scams often impersonate people or firms and their credentials.
- Search for online reviews. Search the company name and/or salesperson alongside words such as “scam” or “complaint.”
- Check email addresses. Verify that the email you’re communicating with is that of a real adviser associated with a legitimate company. Remember that scammers may register email addresses that are very similar to a legitimate domain, perhaps changing only one letter.
- Look for spelling errors. Given that many scams originate overseas, ads and other communications may contain spelling mistakes.
- Consult with a trusted adviser. If your bank or investment/financial adviser cautions you about your new investment, don’t dismiss those concerns. Further investigate the new “investment opportunity.”
- Trust your instincts and think twice before investing: If an investment seems fishy or too good to be true, it probably is.
To protect your identity and network:
- Lock down your profile. Change your settings to keep your friends lists, photos, and posts private. This prevents scammers from learning specific information about you as well as your friends.
- Verify friends. If a friend suddenly messages you about a “great investment opportunity,” contact that person outside of social media (via phone call or text) to ensure that his or her account hasn't been hacked.
- Never share credentials. Do not provide login information, a Social Security number or financial details to anyone you meet online.
- Do not provide strangers with access to your devices. Do not allow anyone you do not know to access your computer or mobile phone remotely. Oftentimes, scammers pose as a representative of a company with which you have an account and ask for a password or answers to security questions. Within seconds, they are able to empty everything in the accessed account.
Consumers who suspect a scam or an unfair business practice should contact the Ohio Attorney General’s Office at www.OhioProtects.org or 800-282-0515.