- Americans reported losing $5.7 billion to investment scams in 2024, according to the Federal Trade Commission. The typical victim lost more than $9,000 on average.
- “Pig-butchering scams” are a common investment fraud whereby scammers develop a relationship with victims, entice them to invest money and then swindle them.
- There are three common signs of fraud that can help people avoid being duped.
Consumers lost $5.7 billion to investment scams in 2024 — more than in any other type of fraud and up 24% from 2023, according to new data from the Federal Trade Commission.
Investment scams generally involve claims that a consumer will get big returns by investing in a hot new moneymaking scheme, according to the FTC.
Most people — 79% — who reported an investment scam to the FTC lost money, with the typical victim losing more than $9,000 on average, the agency said.
Since FTC data is based on consumer reports of fraud, the true scope of investment fraud is likely much higher after factoring in people who don’t step forward.
“These scams are becoming a really huge problem for consumers,” said John Breyault, the National Consumers League’s vice president of public policy, telecommunications and fraud.
AI, cryptocurrency contribute to investment fraud
Common investment frauds include “pig-butchering” scams, a name that references the practice of fattening a pig before slaughter.
The fraudsters often contact victims out of nowhere — perhaps via text, social media or a dating app — to try to develop relationships and gain trust before pitching investment opportunities that supposedly yield high returns, often in virtual assets such as cryptocurrency, experts said.
Though the investments may seem legitimate, criminals eventually disappear with the consumers’ money.
It has gotten easier to commit these and other related frauds as artificial intelligence has helped make criminals more convincing, such as in using deepfakes, Breyault said. Deepfakes are manipulated videos or other images or sounds in which people can say and do things that seem real but are not.
Organized crime networks have also established scam operations centers across Southeast Asia, in countries including Cambodia, Laos and Myanmar, according to the Council on Foreign Relations. The centers are staffed by thousands of people, often illegally trafficked and forced to carry out these investment schemes globally, it said.
Criminal networks often use cryptocurrency to facilitate pig-butchering frauds because it lets them “move substantial funds easily, cheaply, and without much fear of detection,” researchers at the University of Texas at Austin wrote in a recent research paper.
How to reduce investment fraud risk
While there’s no “silver bullet” to protect against fraud, there are ways consumers can reduce their risk, Breyault said. Here are three characteristics that run through many frauds, he said:
- Urgency. Be wary of any pitch that has a form of urgency attached to it, Breyault said. The FTC warns that scammers “want you to act before you have time to think. … They might threaten to arrest you, sue you, take away your driver’s or business license, or deport you. They might say your computer is about to be corrupted.”
- Unusual payment method. Scammers often ask victims to pay in specific or unusual ways, Breyault said. “They often insist that you can only pay by using cryptocurrency, wiring money through a company like MoneyGram or Western Union, using a payment app, or putting money on a gift card and then giving them the numbers on the back of the card,” the FTC said.
- Isolation. Scammers will try to isolate victims so they don’t tell other people about the circumstances who might alert them that it’s a scam, Breyault said. They might say things like, ”‘No one will believe you if you tell them about this,’ or ‘the cops will come get you if you report it,’ or ‘your loved ones will be in danger,’” Breyault said.
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