While anyone who socializes, conducts business or communicates digitally can be targeted by cyber criminals, investors are now the number one target for internet crime. This year, investment scams topped the FBI Internet Crime Report 2022 as the costliest of cyber crimes. Online investment scams, particularly those involving cryptocurrency, have sharply risen over the past 18 months. Americans lost $3.31 billion through investment scams in 2022, a 127% increase over the year before. The FBI Internet Crime Report also noted an uptick in criminals using social engineering tactics to target investment accounts rather than traditional bank accounts, meaning individual investors must be more cautious than ever.1
The increase in cyber investment scams has occurred as more people are investing via the quick and convenient internet, which may make them more susceptible to fraudulent investment schemes. Despite the rise in investment scams, if you know what to look out for, there are ways to protect yourself and your assets. Here’s what you need to know.
What are cyber-enabled investment scams?
Online investment scams are schemes to defraud people by convincing them to buy stocks, bonds, commodities, real estate or cryptocurrencies. The pitch, which usually comes via an unknown sender’s text message or direct messages on social media, is typically centered on sizable returns with minimal risk. The reality is often that there are no returns at all — and losses include your outlay to purchase the once-in-a-lifetime opportunity.
These scams rely on social engineering tactics. By leveraging freely available data collected from social media sites, scammers can contact targets via messaging platforms, build trust by knowing just enough about them, and promise a low-risk, lucrative opportunity. The tactics can be very convincing, with one recent, widespread where scammers impersonated Fortune 100 companies to lure people with fake investment options, using the companies’ brand reputations to trick consumers into investing.2