In 2025, the Federal Trade Commission (FTC) revealed that fraud cost consumers over $12.5 billion across the previous year. Scammers have many tricks up their sleeves to convince victims that they will profit from the fast and low-risk profit solutions. Targets might transfer money to a thief’s account before they realize that the scheme is fraudulent.
However, you can reduce your risk of becoming involved with fraudsters by remaining vigilant and watching out for common red flags.
What Are the Different Types of Financial Fraud?
Financial fraud ranges from credit card scams to identity theft. Scammers may steal sensitive information about an individual, such as their bank account details, and then exploit it.
Investment fraud is one of the most common and potentially harmful types. Victims pour large sums into investment schemes that never existed — sometimes their entire life savings. Getting that money back is rarely straightforward, and in many cases, it’s simply gone.
How to Spot Signs of Investment Fraud
Investment fraud is a common issue in the US. In early 2026, a criminal from the US was sentenced to over five years in prison for stealing from more than 15 individuals.
The fraudster and his co-conspirators persuaded the victims to invest between $5,000 and $550,000 in total. The scammers promised risk-free returns of 200% to 1,000%, while using the money to fund extravagant activities.
If you have doubts about a proposed investment, look for common telltale signs of fraud:
Aggressive, high-pressure methods: Scammers often try to push and pressure victims into committing to investments. They may tell you that you’re missing out and claim others will benefit instead of you. An actual financial adviser will give you time to ask questions and think.
Promises of super-high returns: Fraudsters may try to convince you that a scheme guarantees high-value returns with little or no risk. If someone promises you a zero possibility of loss, their claim contradicts how financial markets work.
Urgency: Scammers usually want to secure funds as soon as possible. They may claim that offers last a short time to inspire fast investments.
Lack of online visibility: The individuals offering an opportunity may be hard or impossible to find online. If they have websites, they might make unrealistic claims about past successes.
Evasive behavior: Scammers will be reluctant to have you call them back or provide contact details. They may not answer questions properly or provide evidence to support claims.
Unsolicited sales pitches: Untrustworthy individuals tend to make unsolicited pitches by phone, email, or in person.
If one or more of these red flags seem familiar, someone may be attempting to defraud you.
How to Verify That an Investment Opportunity Is Legit
You can take several steps to verify a scheme’s legitimacy before handing over personal information or funds.
Check the company’s credentials: Use the Investor Adviser Public Disclosure (IAPD) website to verify that the individual or company you’re dealing with is licensed. This process is the simplest way to find a reliable firm.
Research the investment: Look into the opportunity’s validity for yourself. Try to find others who have invested in the same scheme, and search for reviews about the company.
Request documentation: Ask for documentation on the investment, which should explain the opportunity, the projected return, and other key details. If you receive this paperwork, seek expert advice to confirm its authenticity.
Talk to an independent financial adviser: Wait before committing to the scheme. Consult an independent adviser who can spot the red flags you might have missed.
If an investment opportunity seems too good to be true, take the steps above. Unlicensed, unregistered teams that have an unclear history and a lack of paperwork could be scammers.
What Should You Do if You Suspect Fraud?
If you suspect foul play and you’ve already invested funds, contact the relevant payment service provider. They may be able to help you recover your money. Also, update your access credentials for your bank as soon as possible. Document everything related to the suspected fraud. Save emails, text messages, screenshots, transaction receipts, and any contracts or promotional materials you received.
The FTC’s website offers advice on dealing with fraud. Report all potential scams to the FTC — it helps them build cases against perpetrators and raise awareness. While investment fraud often causes significant financial losses, following the tips above and conducting thorough research can help you stay safer.
