Scammers are targeting American investors to the tune of $5.7 billion — here are the three signs of a hustle and how to protect yourself from costly scams

Common investment scams

The Washington State Department of Financial Institutions provides a helpful list of common investment fraud schemes, including:

• Fraudulent promissory notes – Short-term notes offered by fake companies that promise high returns but fail to deliver.
• Ponzi or Pyramid schemes – Existing investors are paid money from new investors, while the actual "assets" being invested in either don't exist or are worth very little.
• Real estate investment fraud – Scammers convince investors to put money into "hard money loans" or "property flipping" schemes, often misleading them about the risks, potential returns or property values.
• Cryptocurrency scams – Fraudsters create fake coins, heavily promote them and sell them to investors. Once the price rises, they cash out, leaving the coins worthless.

The U.S. Secret Service also warns about "pig butchering" scams, where fraudsters build trust with victims before tricking them into investing in fake cryptocurrency projects.

Subscribe to our free newsletter

Get top stories & exclusive content.
Join our 200k+ community.

By signing up, you accept Moneywise Terms of Use, Subscription Agreement,
and Privacy Policy.

How can you protect against fraud?

You don't want to fall victim to these scams, so watch for three key signs of investment fraud:

• Impersonation of a trusted source – Scammers may pretend to be government officials, financial advisers or even friends and family members. If you get an unexpected call from a government agency or familiar contact, hang up, look up the phone number and call the agency or your family member yourself.
• High-pressure tactics and urgency – If you are told you must invest immediately and discouraged from researching the opportunity or consulting others, it’s likely a scam. Legitimate investments don't require rushed decisions. Always take time to verify information.
• Untraceable payment methods – Be wary if you’re asked to pay using cryptocurrency or wire transfers. Scammers prefer these payment methods because they are hard to trace, making it nearly impossible to recover the lost funds.

As a general rule, avoid investing in:

• Anything you learn about on social media.
• Opportunities you don’t fully understand.
• Offers that rely on aggressive sales tactics.

By staying vigilant, you can avoid losing money and becoming one of the millions targeted by scammers who promise great investments only to disappear with your cash.