NEW YORK (AP) — Last year, consumers lost an estimated $3.8 billion in the U.S. alone to financial scams, including cryptocurrency schemes. But understanding the common signs of investment fraud can help prevent you from becoming a victim.
Troy Gochenour, 50, of Columbus, Ohio, found this out the hard way. He was conned out of $25,800, including $15,800 in borrowed money, in a crypto-mining scam that began with a WhatsApp message from a stranger. He had just moved home and was lonely, so he started online dating. The scammer promised guaranteed returns on investment and Gochenour was taken in.
The speed and convenience of the internet, the rise of online payment platforms and apps, and the spread of financial misinformation have all contributed to the increase in scams. Isolation and loneliness during the pandemic have also been exploited.
Gochenour said the scammer painted a picture of what life would be like when he was rich. He followed her instructions and set up a crypto wallet, and it appeared that the money he transferred there was growing just the way his scammer said it would. But when he woke up one day to check the balance, the money was gone.
To avoid being taken for a ride, the Federal Trade Commission (FTC) advises to watch out for offers that sound quick, easy and low- or no-risk. Many involve real estate, cryptocurrency, financial coaching, or gold. Look for words like “proven” and “guaranteed”, along with testimonials from people claiming to have benefited wildly. These are likely paid actors and invented reviews. Offers also tend to come with time pressure and elaborate steps that require more money at each stage.
If you get an out-of-the-blue call, text, or e-mail about an investment opportunity, the FTC says it’s a scam. Don’t accept any unsolicited offers. Take time to research the offer and run it by friends or advisers. Legitimate companies will let you investigate before spending any money.
When it comes to crypto investment scams, a tell-tale sign is if the scammer asks you to send money in advance for any reason. Never mix online dating and investment advice and be wary of exaggerated claims about current events.
If you suspect an investment scam, delete, hang up and walk away. Report it to the FTC, the BBB, the CFPB, and the Internet Crime Complaint Center. And know your friends; someone may be spoofing their account.
The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.
