BE ON THE LOOKOUT FOR INVESTMENT SCAMS:
An investment scam may be lurking in your email, your social media accounts, or on a telephone call.
Investment fraud succeeds because people read, hear and believe the promises of an investment source or guru and they do not investigate the facts related to the proposed investment (or the person promoting it). To help educate investors, North American Securities Administrators Association (NASAA) state and provincial securities regulators have identified the following financial products and practices as 2023’s most popular current potential threats to unwary investors.
If you have any questions about the material below, please contact your state of provincial securities regulator using NASAA’s interactive Contact Your Regulator map.
CURRENT INVESTOR THREATS
DIGITAL ASSET FRAUDS
Schemes using digital platforms are effective because scammers can use online communications to quickly and efficiently reach many potential victims. Although their promotions often use slick professional imagery and professional videos to tout lucrative financial instruments, the sellers are often not registered or licensed by state regulators to deal in securities.
Although legitimate firms sell products that may act as a hedge against inflation or that are not correlated with the stock markets, bad actors often claim to provide safety by removing all economic risk from their investments. Investors should remember that all investments bear risk.
PIG-BUTCHERING SCHEMES
Many of these schemes are affinity frauds that are also heavily tied to emotion. Perpetrators of pig-butchering schemes contact victims – oftentimes seemingly at random – and develop relationships before soliciting greater and greater investments. After draining the victim’s bank accounts, the promoter simply disappears with the money. The name comes from the practice of fattening a pig before slaughter, and many modern pig-butchering schemes are associated with digital asset frauds.
Learn more about romance scams and affinity fraud.
SOCIAL MEDIA AND INTERNET SCHEMES
Social networking through the internet allows people to connect to one another more quickly and easily than ever before. Investment promoters increasingly are logging on to find investors … and their money.
Social media has become more saturated with financial content than ever before, leading to the rise of the financial influencer or “finfluencer.”
