How to help stay safe from investment scams

Investment scams are surging around the world – and regular people are paying the price. In fact, American consumers reported losing $5.7 billion to investment fraud in 2024 according to the Federal Trade Commission, making it the costliest fraud category in the U.S. 

Globally, the trend is just as concerning. International reports show that investment scams account for the largest share of fraud losses worldwide, driven by rises in cryptocurrency-related schemes, AI-enhanced fraudulent ads, and scams originating on social media. 

Understanding how these scams work – and how to spot them – can help you protect your money and your financial wellbeing.  

What are investment scams?

Investment scams occur when fraudsters encourage people to put money into false, misleading, non‑existent, or fraudulent investments. These scams often promise high returns with little or no risk, and may appear to involve stocks, foreign exchange, or digital assets like cryptocurrency.

Scammers frequently impersonate legitimate companies, use professional‑looking websites, and provide fake account statements to appear trustworthy. Their goal is to gain your trust quickly, persuade you to invest more money, and then disappear once funds are transferred.

Types of investments scams

Investment scams take many forms. Some of the most common include: 

Traditional investments scams

Fraudsters contact individuals posing as bankers, financial advisors or investment professionals from well-known entities offering lucrative investment opportunities. They may reach out about these “opportunities” via phone call, text, email, social media message, or ads on social media. These offers often rely on high-pressure sales tactics to rush decisions.  

These fraudsters may use familiar bank branding and logos or even the names and photos of real employees or leaders to make themselves look more legitimate. Their goal is to convince targets to give up money or information that can allow them access to their accounts.  

Increasingly, investment scams of all kinds are originating on social media platforms such as Facebook or X, or through messaging apps, such as Telegram and WhatsApp. 

Social media pump-and-dump scams

In pump-and-dump schemes, scammers create fake ads, websites, and online trading groups lure targets to join a “trading forum” where they hype up certain stocks. The fraudsters’ goal is to get individuals to buy the stock while they secretly sell their own shares. 

Once the fraudsters dump the stock, the price crashes – leaving victims with major losses. 

Cryptocurrency investment scams 

Cryptocurrency scams have surged as digital assets become more popular. Scammers may direct victims to transfer their assets to fake crypto trading platforms that show impressive gains, which encourages targets to make additional deposits. Eventually, when victims attempt to withdraw their funds, their requests are rejected or ignored.

Cryptocurrency’s novelty, decentralization, and lack of oversight may enhance the complexity of fraud and scam scenarios, while reducing the likelihood of victims recovering their funds. 

Pig-butchering scams

Pig-butchering scams combine investment fraud with social engineering. Scammers build relationships with victims over weeks or months – often making contact through social media, messaging apps, or dating platforms – before introducing a fraudulent investment opportunity. 

Victims will often be convinced to invest increasingly large amounts before the fraudster cuts off all contact and the funds are lost. 

Investment scams : Red flags to watch for

• Be wary of any unsolicited investment advice, particularly from someone you’ve only interacted with online. 
• Beware of people who make a connection on a social media platform and then attempt to move communication to a private channel such as WhatsApp or text message. Legitimate financial professionals will not approach potential clients this way. 
• Beware of advertisements containing language guaranteeing high returns on investments or offering free money. 
• Watch out for firms or individuals whose professional backgrounds cannot be validated by conducting independent research, checking additional sources, and looking at their history and track record. 
• Investment scams involving AI-generated marketing materials as well as fake videos and voice recordings are on the rise. If you connect with a social media contact, watch out for signs of abnormal speech patterns, longer-than-usual pauses between words and sentences, or the person’s voice sounding flat and lifeless.  

Be cautious if an investment opportunity involves:

• Sending funds through an intermediary or to an account at an institution different than the one the “financial advisor” works at. 
• Downloading specific software to supposedly assist with transferring funds or purchasing crypto assets. 
• Anyone online encouraging you to buy specific stocks immediately. 
• Urgent messages pushing you to “buy now” or increase your investment quickly — especially after a small early success. 

Tips to help protect yourself

• If something sounds too good to be true, it probably is – be skeptical. 
• Be extremely wary of investment opportunities offered on social media – even if it looks like it’s from a company you trust. 
• Slow down. Avoid any “urgent” requests and be mindful of responding too quickly with personal or financial information. 
• Never give out any personal information on unsolicited contact, especially non-publicly available information such as account numbers, passwords, PINs or credit card numbers.  
• Remember: BMO will never contact you via unsolicited phone call, email, text, or social media message to ask for sensitive information, passwords, PINs, or verification codes (one-time passcodes). If you get a call, voicemail, email, text or social media message from someone claiming to be from BMO and you think it’s suspicious, do not share any information and contact us immediately using the information on the back of your card.  
• Speak with a licensed financial advisor before making large or unfamiliar investments. 
• Remember that reputable financial institutions do not recommend specific stocks through social media or group chats. 
• Always visit the company’s official website or app to verify offers. 
• Treat any “quick money” opportunity as a major red flag. 
• Report suspicious ads or posts directly through the social media platform. 
• If you are contacted by fraudsters posing as financial advisors and offering you lucrative investment opportunities, you are encouraged to report it to: 
  • Your financial institution 
  • The Federal Trade Commission
  • Local police authorities 
• Be sure to keep a close eye on your transactions and accounts. Regularly review your bank statements and make sure that all the transactions are legitimate. If you notice unauthorized activity, take steps to report fraud right away. 

The bottom line

Investment scams have become one of the leading sources of financial losses from fraud worldwide, as criminals increasingly leverage A.I., social media, and personal relationships to target their victims. By understanding how these scams work, recognizing the warning signs, and taking simple precautionary steps, you can play a key role in helping to protect your money – and your peace of mind.