In 2024, investment scams siphoned off a staggering $5.7 billion from consumers, marking it as the most damaging type of fraud and representing a 24% increase from the previous year, according to fresh data from the Federal Trade Commission. These scams typically lure consumers with promises of lucrative returns in a seemingly foolproof investment scheme, as noted by the FTC.
Alarmingly, 79% of individuals who experienced an investment scam reported financial losses, with the average loss per victim exceeding $9,000, as detailed by the agency. However, since the FTC’s figures rely on fraud reports from consumers, the true magnitude of investment scam losses might be significantly greater, considering many incidents go unreported.
"Investment scams are posing a substantially growing concern for consumers," remarked John Breyault, the National Consumers League’s vice president overseeing public policy, telecommunications, and fraud.
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One notable form of investment fraud is the "pig-butchering" scam, named after the practice of fattening pigs before slaughtering. Scammers typically initiate contact out of the blue—whether through text messages, social media, or dating apps—aiming to build trust and relationships before suggesting seemingly profitable investment ventures, often involving cryptocurrency.
Despite appearing credible, these investments are a facade, and eventually, the crooks vanish with the victims’ funds.
The rise of artificial intelligence has inadvertently made committing such frauds easier. AI tools, including deepfakes, enable criminals to craft more convincing deceptions, explained Breyault. Deepfakes are manipulated media that create realistic but misleading images or videos.
Crime syndicates have also set up extensive scam operations across Southeast Asia, in places like Cambodia, Laos, and Myanmar, according to the Council on Foreign Relations. These operations are often staffed by trafficked individuals forced into carrying out global investment scams.
Cryptocurrency is favored by these criminal networks to execute pig-butchering schemes because it allows them to "swiftly transfer large sums of money with minimal detection risk," as researchers from the University of Texas at Austin noted in a recent study.
While a foolproof method for avoiding fraud doesn’t exist, consumers can take steps to mitigate their risk, Breyault suggested. Here are three common traits found in many scams:
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Urgency: Be cautious of any proposal that creates a sense of urgency. The FTC cautions that scams typically demand action before you can think, sometimes threatening legal or financial repercussions.
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Unusual Payment Methods: Scammers often request payment through unconventional methods, such as cryptocurrency, money transfers via MoneyGram or Western Union, payment apps, or gift card numbers, according to the FTC.
- Isolation: Fraudsters may attempt to isolate victims, discouraging them from discussing the situation with others who might recognize it as a scam. They might say things like, "No one will believe you," "Authorities will arrest you if you report this," or "Your loved ones could be endangered," as Breyault pointed out.
