Investment scams are becoming increasingly sophisticated. In 2025 alone, consumers worldwide lost over $4.6 billion to investment fraud. Here are the key warning signs every investor should know.
1. Guaranteed Returns
No legitimate investment can guarantee returns. If someone promises you'll "definitely" earn 20% monthly with zero risk, walk away immediately. All investments carry some level of risk, and anyone who tells you otherwise is lying.
2. Pressure to Act Quickly
Scammers create artificial urgency: "This offer expires today!" or "Only 3 spots left!" Legitimate investment opportunities don't evaporate overnight. Take your time to research.
3. Unlicensed Sellers
Always verify that the person or firm offering investments is registered with relevant regulators like the FCA (UK), SEC (US), or ASIC (Australia). Our regulatory warnings page tracks firms flagged by regulators.
4. Complex or Secretive Strategy
If you can't understand how the investment works after a reasonable explanation, that's a red flag. Scammers often use complexity to confuse victims.
5. Unregistered Investments
Most legitimate securities must be registered. Check databases like the SEC's EDGAR or FCA's Financial Services Register.
6. Celebrity Endorsements
Fake celebrity endorsements are rampant in crypto and forex scams. Always verify directly through official channels.
7. No Written Information
Legitimate investments always come with prospectuses, fact sheets, and other documentation. If they can't provide written details, it's a scam.
8. Difficulty Receiving Payments
If you can invest easily but face barriers when withdrawing, this is a classic Ponzi scheme indicator.
9. Offshore and Untraceable
Scammers often operate from jurisdictions with weak regulation. Be extra cautious with firms based in obscure locations.
10. Too Good Social Proof
Fake testimonials, fabricated reviews, and purchased social media followers are common tactics. Always cross-reference reviews across multiple platforms.
What To Do If You Suspect a Scam
Report it to your local financial regulator immediately. In the UK, contact the FCA. In the US, file a complaint with the SEC or FINRA. The sooner you report, the more likely authorities can take action.