Investment and Imposter Scams: What They Are and What to Do About Them

unknown call smartphone fraud
Lisa Hochgraf Photo
Senior Editor

4 minutes

Teach your staff about these common fraudulent schemes, plus how to protect members and themselves.

According to the latest Federal Trade Commission data as reported by the fraud prevention education program First Line of Defense, the number of reported scams in 2022 decreased by half a million compared to 2021; however, the total loss increased. In 2022, people reported losing $8.8 billion to scams, $2.6 billion more than 2021. 

Of the total loss, investment scams were responsible for $3.8 billion in losses. That's more than double the total reported losses to investment scams in 2021 and more than any other scam in 2022. 

There also was a notable increase in business-focused imposter scams, with total reported losses of $660 million in 2022. In comparison, business imposter scams were responsible for $453 million in losses in 2021 and $196 million in 2020. 

Your staff may have questions about investment and imposter scams, including what they comprise, who is most likely to fall prey to them, what would be an example of each and what can be done about them. 

Scam Characteristics 

In an investment scam, the fraudsters attempt to lure a person in with promises of teaching them how to make a lot of money quickly, easily and with low risk. They usually encourage investing in financial or real estate markets. The scam may begin with a free seminar, but the scammers later charge a large fee for their “proven” investment tricks. 

An imposter scam often begins with a call, text or email. Fraudsters may pretend to be a known person a family member or a friend. Or they may pretend to work for the government, a trusted company or a financial institution. They may ask people to transfer money from their financial institution, wire money, put money on a gift card, or send cryptocurrency. 

Who Gets Scammed Most?

According to FTC data from First Line of Defense, if people paid a scammer, the largest reported losses were through financial institution transfers ($1.5 billion total losses) and cryptocurrency ($1.4 billion total losses). 

Compared to scams that were initiated by other means, scams that began on social media platforms accounted for the most money lost overall ($1.2 billion), but when scammers made contact by phone, the per-person loss was the highest ($1,400 median loss). 

Younger adults (ages 20-29) reported losing money more often than older adults (ages 70-79), but when older adults did lose money, they lost more than anyone else. 

Types of Investment and Imposter Scams 

Here are several types of common investment scams:

  • Investment coaching scams 
  • Real estate investment seminar scams 
  • Precious metals and coins investments scams 

Imposter scams include:

  • Social Security scam calls
  • Romance scams
  • IRS imposter scams
  • Nanny and caregiver imposter scams
  • Family emergency scams 
  • Tech support scams 
  • Grandkid scams 

Talk with your staff about how they think your members might be affected by these scams. Have they worked with any members who have been victims of these types of scams or been concerned that they might be? If so, ask the participant(s) to share how they handled the situation and what advice they gave to the member. 

Avoiding Investment and Imposter Scams 

In addition to the strategies generated by your employees, here are several tips for avoiding investment scams they can share with your members.

  • Remember that statistics, reviews and testimonials can be faked. Do your own research and independently verify the claims being made. 
  • Scammers may exaggerate the significance of current events to make the investment opportunity feel more exciting and relevant. Don't allow the “hype” to make you feel pressured into a commitment. 
  • While the scammer may try to convince you otherwise, every investment comes with at least some level of risk. No one can guarantee that any single investment will be successful. 
  • As always, if something sounds too good to be true, it probably is. 

Additionally, these are tips for helping members in avoiding imposter scams:

Never send money to someone you don't know or have only met on the internet. 

If you receive a request for money or payment, even if it appears to be from someone you know, exercise extreme caution. Do not send payment without independently verifying the legitimacy of the agency, person, or company making the request. 

  • Do not use the phone number, email, or other contact information they provide. Look it up yourself. 
  • Don’t trust caller ID; it can be faked.
  • Never pay with a gift card, wire transfer or cryptocurrency.
  • Remember that government agencies will not threaten you or contact you with promises of or demands for money. 

Also tell your staff to encourage members to report any experience they have with an investment, imposter or any other kind of scam to the FTC. Reporting scams and fraud helps stop the perpetrators and prevents others from becoming victims. 

Lisa Hochgraf is CUES’ senior editor.

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