“I have a deal for you!” Be wary of people you meet online who have investment opportunities

QUINCY — If someone you met online starts telling you they have a great investment opportunity or encourages you to buy cryptocurrency, that should set off red flags, even if they’re someone you’ve been talking to for a long time.

This scenario could be the beginning of an investment scam.

Scammers often spend weeks or months building a platonic or romantic relationship with someone in order to trick them into handing over large sums of money in exchange for a “guaranteed investment opportunity.”

A study by the Better Business Bureau shows that investment scams of this type are on the rise. Since 2020, consumers have submitted more than 4,000 reports of investment scams to the BBB Scam Tracker SM. In 2023, reports reached a three-year high.

The BBB study found that investment scammers typically target people with existing investments and retirement accounts. They often encourage people to invest in cryptocurrencies, taking advantage of the fact that it’s a less regulated and sometimes misunderstood industry.

This approach has led to an increase in losses in BBB reports, with the median loss rising from $1,000 in 2021 to nearly $6,000 this year.

To avoid investment scams, keep in mind that if an opportunity seems too good to be true, it probably is. No investment is without risk. If someone promises you an easy investment with guaranteed returns, be wary, even if it’s a friend or partner.

Pay attention to these warning signs:

A stranger suddenly wants to be your friend
Someone asks you to invest in a little-known cryptocurrency
Requests to share your cryptocurrency wallet with someone you don’t fully trust
Guaranteed Return Claims Too Good to Be True
An investment that requires little effort and time to make
Someone proposes his secret strategy
Someone says not to seek his claims

How to avoid this scam:

Beware of slogans. There are certain phrases that should alert you when someone is talking about an investment opportunity. Don’t believe anything that is “guaranteed” to work well or that offers low or no risk with a high return.
Check licenses. The investment industry is highly regulated. Be wary of investments not registered with the SEC or other investment industry regulators, and check the licenses of sellers.
Don’t give in to high-pressure sales tactics. Many risky investments are sold at “opportunity meetings” or other high-pressure situations. A similar tactic is to use a “shill,” a decoy who offers a fictitious success story but is actually paid by the project sponsor. Some sales pitches rely on a common bond, such as the same ethnicity, church, occupation, etc.
Think about how you make money. If you see that the reward for recruiting new distributors and selling products and training materials is greater than the reward for selling products, you may be dealing with a pyramid scam.

Visit BBB.org to verify a business or file a complaint, BBB Scam Tracker to report a scam, and BBB.org/scamstudies to learn more about this and other scams.

Don O’Brien is the Regional Director of the Better Business Bureau in Quincy. Contact him at [email protected] or 217-209-3972.