🎯 In 30 seconds: Investment fraud was the costliest type of online crime reported to the FBI in 2025, with about $8.6 billion in reported losses. Most scams follow a few patterns: hype a tiny stock and sell into the buying, pull you into a group chat with "expert" signals, or move you onto a fake trading app that shows profits you can never withdraw. Guaranteed high returns, pressure to act fast, and anyone you met online steering your money are the biggest red flags. Check every seller on BrokerCheck or Investor.gov, and report fraud to the SEC and IC3.
How big the problem is
The FBI's Internet Crime Complaint Center (IC3) received 1,008,597 complaints in 2025 with reported losses of $20.877 billion. Investment fraud was the largest category by loss, at about $8.65 billion. IC3 also counted roughly 1,600 complaints and $160 million of losses from investment club scams aimed at US stock investors through social media and messaging apps.
These are only reported losses. Many victims never report, out of embarrassment or because they do not realize what happened. Young people are not immune: across all crime types, IC3 received more than 140,000 complaints in 2025 from people under 30.
Pump and dump
In a pump and dump, fraudsters spread false or misleading information to create a buying frenzy that "pumps" up a stock's price. Then they "dump" their own shares at the inflated price. When the hype stops, the price falls and the late buyers lose money.
The SEC notes that microcap companies (very small public companies) are especially vulnerable, because little reliable public information exists about them. The hype can come from social media, investment newsletters, online ads, chat rooms, messages and even paid "research" websites.
Warning signs of a pump:
- A stock you never heard of, often trading for pennies or a few dollars, suddenly appears everywhere at once.
- Claims like "the next 10x", "about to be acquired" or "huge announcement coming" with no filing to back them.
- Pressure to buy now, before "it takes off".
- Very little real information: no recent financial statements, or filings that do not match the story. Check SEC EDGAR (Market data sources).
Group chats and "signals"
The SEC's December 2025 investor alert describes a common pattern. You are invited to an investing group chat, or added after clicking a social media ad. The group claims to be led by a famous expert, a "professor" or a CEO. Sometimes it uses a deepfake video of a real, well-known person. An "assistant" handles members. Members post screenshots of winning trades and praise the leader's "AI signals".
Then the group steers you to open an account on a specific website or app. In one case the SEC brought, the clubs directed investors to crypto trading platforms that falsely claimed to be licensed by regulators, including the SEC, and sold them fake offerings described as "zero-risk".
The SEC's advice is direct: never rely only on information from group chats, and be wary of any chat where someone you do not know gives you investment advice. Group chats are also used to run classic pump and dumps.
Fake trading apps and relationship investment scams
A relationship investment scam starts with a person, not a stock. Someone contacts you by "wrong number" text, a dating app, a game or social media. They are friendly and patient, sometimes for weeks. Eventually they mention how much they make trading, and offer to show you.
The app may look professional and may even be in a well-known app store. The SEC notes that being in an app store does not make an app or its trading legitimate. When you try to withdraw, you are told to pay a fee, a tax or a deposit first, or that the SEC or another agency has frozen your account and you must pay to unfreeze it. After you pay, contact stops. You do not get the "profits" or any of your money back.
Guaranteed returns and other universal red flags
Every investment carries risk. In the SEC's words, the promise of high returns with little or no risk is a classic sign of fraud. Treat each of these as a stop sign:
- Guaranteed or very high returns, such as "2% a day" or "no losing months".
- Urgency: "only today", "limited spots", "don't tell anyone yet".
- Unregistered seller: the person or firm does not show up on BrokerCheck or Investor.gov.
- Strange payment methods: paying in cash, wiring to an individual, sending money to a different company than the one you are investing with, crypto sent to an unknown wallet, or being told to lie to your bank about why you are withdrawing money.
- Someone you only know online guiding your trades or your account setup.
- Paid "signal" services with screenshots of profits but no audited track record.
- Requests for your login, one-time codes or screen sharing on your brokerage or bank account.
How to check before you invest
- Check the person and the firm. Search the name on FINRA BrokerCheck and the SEC's Investment Adviser Public Disclosure site. A legitimate broker or adviser is registered. Look at disciplinary history.
- Contact the firm independently. Use the phone number or website from the firm's official Form CRS (relationship summary) on Investor.gov, not the number someone sent you. Scammers impersonate real firms and real people.
- Check the investment. Look up the company on SEC EDGAR. No filings, or filings that contradict the pitch, is a red flag.
- Check with your state. State securities regulators also register sellers; NASAA's site lists each state's regulator.
- Sleep on it. Real opportunities survive 48 hours. Scams depend on rushing you.
More on the regulators and what they do is in Who protects you.
How to report
| Where | What to report there |
|---|---|
| SEC tips, complaints and referrals | Securities fraud: pump and dumps, fake advisers, fraudulent offerings, impersonation of firms |
| FBI IC3 | Internet-enabled fraud, including fake trading apps, crypto investment scams and relationship scams |
| FINRA | Problems with a FINRA-registered broker or brokerage firm |
| Your state securities regulator | Unregistered sellers and local investment fraud |
| Your bank and broker | Right away, to try to stop or reverse transfers and secure your accounts |
Save everything: screenshots of chats, app pages, wallet addresses, transaction records and usernames. Report quickly. The faster a bank is told, the better the chance funds can be frozen.
Try it
Pick any "hot" stock tip you have seen online this month. Do the five checks above: who is promoting it, are they registered, what do the company's SEC filings say, how much does the stock trade (look at it in the screener), and how did it move after the posts appeared. Write a three-line verdict. Then look up your own broker on BrokerCheck and read its record, so you know how the tool works before you ever need it.
- How does a pump and dump work? Answer: Fraudsters spread false or misleading claims to push up a stock’s price, then sell their own shares at the inflated price. When the hype stops, the price falls and late buyers lose.
- A trading app shows big profits, but to withdraw you are told to pay a fee or a "tax" first. What is going on? Answer: It is a fake trading app scam. After you pay, contact stops and you do not get the profits or your money back.
- After being scammed, someone offers to recover your money for an upfront fee. Should you pay? Answer: No. That is a second scam. Government agencies do not charge fees to recover stolen money.
- Someone sends you a phone number for a well-known firm. How should you contact the firm instead? Answer: Independently, using the phone number or website from the firm’s official Form CRS on Investor.gov, because scammers impersonate real firms.
Sources
- FBI IC3: 2025 Internet Crime Report (PDF)
- Investor.gov (SEC): Group chats as a gateway to investment scams, investor alert
- Investor.gov (SEC): Pump and dump schemes
- SEC: Report suspected securities fraud or wrongdoing
- FBI Internet Crime Complaint Center (IC3)
- NASAA: Contact your state securities regulator