Financial Crime World

The Rise of Investment Fraud: A Growing Threat in the United States

Investment Fraud Replaces BEC as Top Dollar Loss

For the first time, investment fraud has surpassed Business Email Compromise (BEC) as the highest reported dollar loss by crime type. This alarming trend highlights the growing threat of investment fraud and its devastating impact on victims.

What is Investment Fraud?

Investment fraud involves schemes where criminals provide false information to victims, causing them to invest or transfer control of assets to the perpetrator. These scams can take many forms, including:

  • Phishing: Scammers use fake emails, messages, or websites to trick victims into revealing sensitive information.
  • Ponzi Schemes: A type of investment fraud that pays existing investors with funds collected from new investors, often promising high returns with little or no risk.
  • Virtual Asset Fraud: Schemes involving cryptocurrencies, such as Bitcoin or Ethereum.

Increasing Prevalence and Demographic Targeting

The number of reported investment fraud schemes and average dollar amount lost per victim have been increasing since at least 2018. Each scheme type targets a certain demographic based on investment fraud typology from the FBI and SEC:

  • Social Media Influencers: Use their large audiences and fans’ rapport to solicit funds for investment fraud schemes.
  • Virtual Asset Schemes: Target individuals with a strong online presence, often using social media platforms.

Rise of Virtual Assets in Investment Fraud

Investment fraud involving virtual assets has rapidly increased, rising 183% between 2021 and 2022. This trend highlights the growing importance of awareness and prevention strategies to protect against these types of scams.

Ponzi Schemes: A Red Flag for Investors

A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors, often promising high returns with little or no risk. Be cautious of:

  • Unusually High Returns: If an investment promises unusually high returns with little to no risk, it may be a Ponzi scheme.
  • Lack of Transparency: If the investment is not transparent about how your money will be used, it may be a scam.

Conclusion

Investment fraud is a growing threat in the United States, and awareness is key to prevention. By understanding the types of schemes and targeting demographics, you can protect yourself from falling victim to these scams. Remember: if an investment seems too good to be true, it probably is.