Investment scams: Types, warning signs, and how to avoid them

What is an investment scam? 

An investment scam is a scheme in which someone lies about an opportunity, its returns or risks, or even their own identity to get your money. Sometimes the investment opportunity is completely fake. Other times, a real asset is used as a prop while the numbers, claims, or access are fabricated. Scammers may also claim that many other investors have already joined to make the offer seem in demand. Common fake opportunities include crypto, property, and precious metals.

The goal is to keep the money flowing for as long as possible. That may mean pushing you to invest more, moving you into crypto, persuading you to liquidate retirement funds, or hitting you again later with a fake recovery offer.

Some scams begin with free seminars or “mentoring” that presents investing as low-risk and highly profitable. Others promise access to funding without using your own money upfront. What follows is usually a series of hefty fees for coaching, access, or account activation. By the time the target realizes the promise was hollow, the scammer has already collected substantial sums.

Common types of investment scams

Online scams focused on investment often start with a message or a referral from someone who seems trustworthy. Let’s look at the most common types. 

Pig butchering (romance) scam 

Pig butchering is a long-con scam. A scammer builds emotional trust first, until they find an opening to introduce a supposedly successful investment opportunity. The target is gradually pushed to invest more and more, usually into a fake crypto platform. 

Regulators often call these relationship investment scams. They commonly appear on dating apps, Instagram, Facebook, Telegram, and WhatsApp.

Romance scams are especially effective against people who are isolated, emotionally vulnerable, or simply willing to take investment advice from someone they’ve been talking to for weeks.

Crypto investment scams 

Crypto investment scams use the appeal and complexity of digital assets to make fake opportunities sound legitimate. Because crypto assets can be moved quickly across borders and offer limited consumer protections, criminals often use them as payment methods in modern investment fraud. 

The scam often starts with a message, where a person claims they made strong returns through cryptocurrency investing and are willing to share the opportunity. The target is directed to a website or app that looks legitimate but doesn’t carry out any real investing.

Gold investment scams

Gold investment scams usually play on fear: inflation, market crashes, government instability, or banking collapse. The scam may involve overpriced gold coins, fake storage programs, fake dealers, or instructions to liquidate real investments and move money into “safe” gold products.

Some schemes are framed as wealth-protection services, while others appear as gold coin investment scams or gold-trading websites that look professional at first glance. In more aggressive cases, targets are told to buy gold bars or coins themselves and hand them over for “secure storage” or “government protection.” 

Wine investment scams

Wine investment scams rely on the appeal of exclusivity. Potential targets are offered fine wine, advance allocations, storage-backed portfolios, or resale guarantees that don’t exist. In many cases, the wine is overpriced, not owned by the seller, or impossible to resell at the promised value.

Cold calls, online ads, fake investment newsletters, and high pressure are common tactics.

Real estate investment scams

Real estate investment scams are often presented as practical, asset-backed opportunities. The pitch may involve short-term loans to property buyers, development or construction finance, fractional ownership in a building, or a share in a project that supposedly generates rental income. Some look like legitimate property investment syndicates. Others promise fast returns from distressed-property or vacation-property deals without the high risk.

These property investment scams often target people who prefer hard assets and want something that feels more tangible than stocks or crypto.

Film investment scams

Film investment scams sell a glamorous story: insider access, tax advantages, celebrity links, or future distribution revenue.

In reality, the production may be exaggerated, misrepresented, or entirely fictional. In some cases, the project is real, but the financial claims around it are misleading. In others, the investment is pushed through aggressive sales tactics that create urgency and discourage scrutiny.

Most people aren’t in a position to judge film financing claims, which makes it easier for fraudsters to hide weak or false information behind industry language and big promises.

Advance fee scams 

An advance fee scam works by convincing you that one more payment is standing between you and your money. You may be told that your profits are ready, your account can be unlocked, or your investment can move forward, but only after you pay a tax, compliance fee, reserve deposit, or something in that vein.

Once you pay, another obstacle usually appears, followed by another charge. The process continues until the victim stops sending money or realizes the funds were never real to begin with.

Ponzi and pyramid schemes

Ponzi and pyramid schemes are built to look successful long enough to draw more people in. In a Ponzi scheme, earlier investors are paid with money from newer ones, creating the false impression that the investment is generating steady returns. In a pyramid scheme, the real focus is recruitment. Participants are pushed to bring in more investors, and the structure starts to collapse as soon as that slows down.

These scams often spread through personal networks and affinity groups because trust helps them grow. They may also be promoted through cold calls, which is why awareness about old-fashioned phone scams still matters. 

Pre-IPO investment scams

Pre-IPO scams are built around exclusivity. The pitch is that you’re being offered rare access to shares in a fast-growing private company before it goes public and attracts wider attention. In reality, the shares may not exist, the seller may have no rights to them, or the documents may be fake. 

Forex investment scams

Forex scams use the promise of easy money in foreign exchange trading to lure people into risky or fraudulent schemes. The offer may involve managed accounts or “expert” traders who claim they can generate consistent returns with little effort from the investor.

The problem is that such trading is already complex and high-risk. Scammers take advantage of that by presenting fake expertise, fabricated testimonials, or professional-looking platforms that make the opportunity seem more credible than it is.

Oil investment scams 

Oil investment scams often appear when energy markets are in the news and investors are looking for the next big opportunity. The pitch may involve oil wells, drilling projects, exploration rights, or energy partnerships that supposedly offer unusually high returns.

What makes these scams effective is that they rely on complexity. Most people can’t verify the technical language, making it easier to hide false claims or assets. 

Pump-and-dump scams 

A pump-and-dump scam works by creating artificial excitement around an asset so the scammer can profit from a price jump. The target is usually a thinly traded stock, token, or other lightly traded investment that can move sharply when enough people start buying. Once the price rises, the scammer sells their own holdings, and everyone else is left with the losses when the hype fades.

Some scammers also try to sound more credible by claiming ties to a legitimate company or by starting with a familiar stock before steering people toward a smaller, riskier one using high-pressure sales tactics. 

Affinity (group) investment scams 

Affinity fraud targets people through a shared identity or sense of belonging. That may be religion, ethnicity, profession, military service, age, local community, or diaspora networks. The scammer is often a member of the group or pretends to be one, which lowers skepticism and speeds referrals. 

Many affinity scams are pyramid or Ponzi schemes. Potential investors are promised strong returns for joining what’s presented as a select circle or pooled opportunity. But once new investors stop coming in, the scheme begins to unravel.

Investment recovery scams 

These scams target people who have already lost money. Someone claims they can trace funds, unlock crypto, sue the fraudsters, or recover assets for an upfront fee. It’s a second scam layered on top of the first. 

Boiler room scams 

Boiler room scams are high-pressure investment fraud operations run by teams of salespeople working from temporary offices or call centers. Their job is to make the company look established, credible, and urgent enough that people invest before asking too many questions.

By the time victims realize the opportunity was fraudulent, the company website may be gone, the phones disconnected, and the scammers behind it operating under a new name.

What are the top investment scams right now?

Right now, the biggest trend is the merger of old fraud psychology with modern digital delivery. Regulators are repeatedly warning about relationship-based crypto scams, fake trading platforms, and scams promoted through social media, messaging apps, and texts. For example, WhatsApp scams are becoming increasingly common, with fraudsters contacting targets directly through messages and links that appear legitimate.

Another growing trend is AI scams focused on investment, where scammers use the language of artificial intelligence to make fake systems sound credible. In late 2025, the Securities and Exchange Commission (SEC) alleged that fraudsters used WhatsApp-based “investment clubs” and supposedly AI-generated tips to funnel retail investors into fake crypto platforms.

Pro tip: Scam prevention is about spotting bad offers as well as limiting the fallout if someone has collected enough of your information to impersonate you elsewhere. Tools like credit monitoring services help you catch new account fraud or other suspicious activity earlier. If you choose NordProtect, you can also get access to Scam Protection.

Investment scam examples 

Recent cases show how varied investment fraud can be:

• NovaTech crypto fraud (2024). The SEC charged NovaTech and related promoters with a $650 million crypto fraud that allegedly affected more than 200,000 investors worldwide.
• NanoBit relationship scam (2024). Promoters used WhatsApp groups, posed as financial professionals, pushed fake crypto offerings, and falsely claimed ties to a registered broker, ultimately taking in more than $2 million that was routed to Hong Kong bank accounts.
• Pre-IPO frauds (2024). The SEC highlighted one $184 million pre-IPO fraud and another $410 million pre-IPO scheme.
• Wine fraud cases (2024–2025). In 2024, a businessman was sentenced in connection with a wine fraud scheme in New York, and in 2025 UK authorities announced jail terms in a wine investment fraud estimated at £37 million (about $45 million).
• Pump-and-dump forfeiture (2025). US prosecutors announced a $214 million forfeiture tied to an alleged pump-and-dump scheme.

What are the warning signs of investment scams? 

Investment scams are hard to spot because they’re designed to look credible. But even when the presentation looks professional, the red flags are often the same:

• Too-good-to-be-true returns. Every investment carries risk. If someone promises high returns with little or no risk, or suggests you can make money without putting in much time and effort, take that as a serious warning sign.
• Pressure to act quickly. “Limited allocation,” “today only,” or “you must fund now” is classic scam language.
• Claims of a secret advantage. Fraudsters love narratives like “exclusive AI system,” “private strategy,” or “special access.”
• Platform that won’t let you withdraw. Fake dashboards are common in crypto and other online investment scams.
• Unusual payment methods. Requests for crypto, wire transfers, gift cards, cash, or gold delivery are major danger signs.
• Unclear registration. If the person or firm can’t clearly prove they’re registered to sell investments, stop there. To check an investment professional or company, use official tools such as SEC and Investor.gov search tools, BrokerCheck, and your state securities regulator.
• Pitching through social media, a cold call, or a romantic connection. That doesn’t automatically make the investment opportunity fake, but it raises the risk sharply.
• Thin, vague, or missing paperwork. Don’t brush aside missing filings, unclear risk disclosures, weak explanations, or documents that don’t fully explain how the investment works.
• Requests to pay to access your money. If someone says you need to pay a tax, compliance charge, or something else before you can withdraw funds, that’s a strong sign of an advance fee scam.
• Focus on community trust. Affinity scams often spread through churches, diaspora groups, online communities, and friend circles.

How to avoid investment scams 

You can’t eliminate every risk, but you can make yourself much harder to deceive. A few ways to avoid scams:

• Research investment opportunities thoroughly. Look up the company, the product, and the people promoting it. Check the SEC’s EDGAR database and contact your state securities regulator to confirm whether the offer is registered and whether the people selling it are allowed to do so.
• Understand the investment yourself. If you can’t explain how the return is generated, that’s a reason to pause. The same goes for shares offered far below their publicly listed market price. If the deal only makes sense as long as you don’t ask too many questions, it’s not a good sign.
• Get an independent opinion. A registered financial institution or broker can help you assess whether an opportunity is legitimate and whether the claims being made are realistic.
• Slow the process down. A legitimate investment professional can survive 24 hours of scrutiny. 
• Treat “AI-powered returns” with skepticism. AI is being used as a credibility prop in modern scams. Fancy language shouldn’t replace evidence.
• Never send money because an online relationship suggested it. If someone you met online starts guiding you toward an investment, step back. Ask a trusted person what they think — someone you know has your best interest in mind.
• Never pay money to unlock your own funds. If you’re told to send money upfront, treat that as a serious warning sign.
• Be extra cautious with alternative assets. Wine, gold, film, oil, land, and pre-IPO shares are harder to verify and easier to misprice.
• Consider protection that helps with fraud fallout. Security tools that offer online fraud coverage help reduce the damage if a scammer gets through your defenses.

What to do if you’ve become a target of an investment scam 

If you think you’ve been targeted, act quickly:

1. Stop all payments immediately. Don’t send more money, even if you’re told it’s needed to release funds, pay taxes, complete verification, or recover your investment.
2. Contact your bank, card issuer, broker, or crypto platform. Ask whether the payment can be reversed, frozen, or flagged.
3. Save evidence. Keep transaction IDs, wallet addresses, screenshots, emails, usernames, phone numbers, and web links.
4. Report it. In the US, the proper authorities include:
   • FTC ReportFraud for scam reporting.
   • FBI IC3 for cyber-enabled fraud, including online investment scams.
   • SEC for suspected securities fraud.
   • CFTC for forex, commodities, and precious metals-related fraud.
   • NASAA state regulator finder to reach your local securities regulator.
5. Warn people around you. Recovery scams often target the same target list again.

References

[1] Federal Trade Commission, “New FTC Data Show a Big Jump in Reported Losses to Fraud to $12.5 Billion in 2024,” FTC, 2025. [Online]. Available: https://www.ftc.gov/news-events/news/press-releases/2025/03/new-ftc-data-show-big-jump-reported-losses-fraud-125-billion-2024