The three signs that cover most scams
- High returns with little or no risk. Phrases like "guaranteed", "risk-free", "double your money" or a steady 2 percent a week. Real investments go up and down.
- Pressure to act now. "Only three places left", "offer ends tonight", or anger when you want time to think.
- A firm that is not authorised by your regulator, or that you cannot verify independently.
If you see any one of these, stop. If you see two, it is almost certainly a scam.
Other warning signs
- You were contacted out of the blue, by call, message, social media or a dating app.
- Celebrity endorsements in adverts or videos. Deepfake videos of well-known business people are now common.
- Payment in crypto, gift cards or to a personal bank account, rather than to an account in the firm's name.
- You are asked to keep it secret from family or your bank.
- Withdrawals are blocked until you pay a "tax", "fee" or "unlock charge".
- Complex jargon that you cannot get a straight explanation of.
- A website that looks professional but was registered recently, or copies the name of a real firm.
Common types of investment fraud
| Scheme | How it works |
|---|---|
| Ponzi and pyramid schemes | Early investors are paid with later investors' money. Returns look steady until new money dries up and it collapses |
| Fake trading platforms | An app or website shows your balance growing. It is fake. When you try to withdraw, you are asked for more money |
| Romance and "pig butchering" scams | Someone builds a friendship or relationship online for weeks, then introduces a "sure" crypto or trading opportunity |
| Pump and dump | Promoters hype a small stock or token on social media, then sell once others buy, and the price collapses |
| Clone firms | Scammers copy the name, registration number and branding of a real, regulated firm |
| Recovery scams | After you have been scammed, someone offers to recover your money for an upfront fee. It is a second scam |
How to check before you invest
- Find your regulator's register yourself. Examples: the SEC and FINRA BrokerCheck in the US, the FCA register in the UK, ASIC in Australia, SEBI in India and the SECP in Pakistan.
- Check every detail matches: firm name, registration number, website address, phone number and email. Clone firms use real registration numbers with fake contact details.
- Check the regulator's warning list of unauthorised firms.
- Contact the firm using details from the register, not from the message you received.
- Search the firm's name plus "scam" or "review", and be wary of glowing reviews that all look alike.
- Talk to someone you trust who is not involved. Scammers rely on isolation.
If it is legitimate, it can wait
Real investment opportunities are still there tomorrow. A legitimate firm will happily give you documents, let you take time, and answer questions. The simplest form of investing, low-cost diversified funds through a regulated platform, needs no secret tips at all. See index funds explained.
If you think you have been scammed
- Stop sending money, whatever you are told about fees or taxes.
- Contact your bank or card provider immediately. Ask them to stop or recall the payment. The faster you act, the better the chance.
- Change passwords if you shared login details, and remove any remote-access software the scammer asked you to install.
- Report it to the police, your national fraud reporting service and your financial regulator.
- Keep evidence: messages, transaction records, website addresses and wallet addresses.
- Expect recovery scams. Nobody legitimate will charge you upfront to get money back.
Being scammed is not a sign of foolishness. These schemes are run by organised groups using scripts refined on thousands of victims. Reporting helps stop them.
For the related tricks that start with a message or link, read our guide to spotting scam texts and phishing emails.
Key takeaways
- Guaranteed high returns, pressure and an unverified firm are the core warning signs.
- Check the regulator's register yourself, and that every contact detail matches.
- Never pay to withdraw your own money, or to "recover" lost money.
- Act fast with your bank if you have paid, and report it.
This article is general information, not financial or legal advice.