How to spot investment scams far and wide on social media

NEW YORK — Social media is full of scammers promising guaranteed returns on investment, and consumers lost billions of dollars to them last year.

Troy Gochenour, 50, of Columbus, Ohio, 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 beautiful stranger.

Financial scams, including cryptocurrency schemes, cost consumers $3.8 billion last year just in the U.S., according to the Federal Trade Commission, twice as much as in 2021.

Those who work in the space, including the FTC and Better Business Bureau, say 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. They also cite pandemic-era isolation and loneliness.

In Gochenour’s case, he spent several weeks messaging with someone who seemed romantically interested in him before she brought up “liquidity mining.”

Though he’d been a crypto skeptic, he eventually began following her advice and instructions. After he set up a crypto wallet, it appeared that the money he transferred there was growing just the way his scammer said it would.

Then one day, when he had transferred about $5,000 of his own money to the wallet, he woke up to check the balance and the money was gone. When he looked at a website his scammer had directed him to, to try to understand what had happened, he saw a “contract.” He contacted the scammer about it, and she told him to contact “customer service,” who told him to put in another $10,000 in order to get all of his money back, plus bonuses.

When he was told he’d have to pay $35,000 in taxes up front to access the $200,000, Gochenour realized it was a scam. By that point, he had taken out nearly $16,000 in personal loans on top of his $55,000 in student debt, each time lured by promises of even greater rewards.

What are some common signs of an investment scam?

Most will sound quick, easy, and low- or no-risk. Many involve real estate, cryptocurrency, financial coaching, or gold. Typically, the company uses words like “proven” and “guaranteed,” along with testimonials from people saying they’re on the other side and have benefited wildly. These are most often paid actors and invented reviews, according to Melanie Mcgovern, director of public relations for the International Association of Better Business Bureaus.

“Watch out for those endorsements,” Mcgovern said. “And know your friends. If you get a message that seems sketchy from someone’s account, especially someone you haven’t heard from in a while, reach out to them on a different platform. Because someone may be spoofing them.”

Offers also tend to come with time pressure: “Make big money fast!” “Once-ina-lifetime offer, gone tomorrow!” Or elaborate steps that require infusions of more money at each stage, such as the liquidity mining con that Gochenour experienced.

What should you do if you suspect an investment scam?

First, take time to research the offer. Scammers want to rush you, so slow down. Search online for the name of the company and words like “review,” “scam,” or “complaint.”

Second, run the information by a friend or adviser. You may not have gotten an offer like this, but chances are you know someone who has, especially as scams often target specific communities, according to the FTC.

Third, don’t accept any unsolicited offers. If you get an out-of-the-blue call, text, or e-mail about “an amazing investment opportunity,” it’s a scam.

Finally, reject the high-pressure pitch.