BBB® Investment scams investigation: BBB tallies 4,000 reports, significant losses

CHARLOTTE, NC (September 5, 2024) ⇒ Since 2020, investment scam reports to BBB Scam Tracker SM 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. That has caused losses to rise, with the median report increasing from $1,000 in 2021 to almost $6,000 this year.

In “Investment Scams: Scams linked to crypto and romance rise, according to BBB study” BBB 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 victims 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 in victims.

● 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.
Investment Scam reports across North America (2021-2023)

● 3,352 – BBB Scam Tracker

● 301,840 – Federal Trade Commission’s Consumer Sentinel Network

● 12,573 – Canadian Anti-Fraud Centre

Scam survivor stories:

Erin in North Carolina, told BBB she met “Andrew” on a Christian dating app, an Italian native now living in Wesley Heights in Charlotte, NC. After developing a “relationship” with Andrew over the course of a few weeks, Erin started making deposits into a crypto account. After several weeks and a final “tax payment” to the IRS, Andrew disappeared and disconnected his phone number, leaving Erin with losses in the hundreds of thousands.

Hallas in North Carolina, reported to BBB about a cryptocurrency scam he encountered on social media. Unbeknownst to him, a friend’s Instagram account was hacked. The scammer, posing as the friend, said they made $10,000 in three hours via Bitcoin. The scammers convinced Hallas to buy $3,700 worth of Bitcoin and then immediately transferred the funds to another website and disappeared.

Red flags

● 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 Spot This Scam:

● 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.

Visit BBB.org to check out a business or register a complaint, BBB Scam Tracker to report a scam and BBB.org/scamstudies for more on this and other scams.

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