Average loss to investment scams reaches $6,000 in 2024 study

By Editor | September 11, 2024

NEWS FROM THE BETTER BUSINESS BUREAU

On September 5, the Better Business Bureau (BBB) published findings from an intensive study focused on investment scam tactics and impacts over the past three years. Through blending long-term romance or confidence scams and integrating cryptocurrency capabilities, median losses to investment scams have increased from $1,000 in 2021 to almost $6,000 this year.
Framed as a modern-day ‘get-rich-quick’ scheme, victims of investment scams are coerced into withdrawing from retirement and savings accounts with many first-hand accounts included in the study describing how they lost hundreds of thousands of dollars. By manipulating dashboards, platforms and reports, scammers misrepresent the performance of a deposit to make it appear like it is generating a massive return, often into the millions of dollars. Social media and internet messaging applications are the primary method to initiate a cryptocurrency investment scam with over 60% of reports to BBB Scam Tracker indicating these platforms were used.
In its study, Investment Scams: Scams linked to crypto and romance rise, some of BBB’s key findings include:
Investment scams persist for months before being detected, often encouraging targets to deposit small amounts of money consistently until thousands of dollars have accumulated.
Organized crime in Southeast Asia is a major contributor to scam activities. However, a growing response to fraud in this region has led to operations relocating.
Many low-level scammers are victims of forced labor which complicates identification and prosecution.
Scam center training documents show how realistic personas are crafted to engage in a romance or confidence scam.
BBB’s 2023 Scam Tracker Risk Report identified investment scams as the No. 1 riskiest scam North American consumers encounter. In Texas, residents have reported $2.1 million lost to these schemes in 2024.
“The first-hand accounts and insights provided in this report will go a long way to helping experienced and new investors recognize the red flags of fraud,” said Heather Massey, vice president of communications and community relations at Better Business Bureau serving the Heart of Texas. “It is easy to get caught up in the excitement while watching an investment generate an increasingly large return. It can feel like you’ve hit the jackpot – and then it comes crashing down when you realize your golden ticket to financial independence has turned into overwhelming debt or the loss of your life’s savings, because it was a scam.”
Some of the red flags of an investment scam include:
The investment strategy is guaranteed to generate massive returns.
The opportunity is offered as a secret or leans on an online romance (e.g., “You should invest in X-Y-Z so we can get married,” or “I’m only telling you about this because I love you.”)
The trader or contact becomes aggressive or insulting if their recommendation to invest more money is refused.
The return can only be accessed after paying excessively high service, tax, or processing fees that were previously undisclosed.
For more information and to read other BBB scam studies, visit BBB.org/ScamStudies.