Pigs, Mules, and Media, Oh my! Investment Scams Are on the Rise

I know, I know, another blog about cyber-scams. With hackers and scammers becoming more and more active every day we want to share as much information as possible to help protect you and your company from attackers.

A rising trend among scammers is the Investment Scam. As investing, transferring money, and cryptocurrency platforms become easier to transact over the internet, so does the prevalence of scams related to these activities. A lot of times we see scams targeting an older generation, however, investment scammers play a little differently. The rise of cryptocurrency has drawn investors of all ages. Investors aged 20 to 49 were more than three times as likely to report losing cryptocurrency to a scammer. In 2022 there have been a few specific trends or schemes on the rise to keep an eye out for.

1. Money Mule

A money mule is a person who, at someone else’s discretion, transfers or moves illegally acquired money. There are three types of money mules: unwitting or unknowing, witting (act willfully blind to their activity), or complicit. What sets Money Mule scams apart is that even if you are unaware you are participating, or just turning a blind eye, you can still be charged with a criminal act and can even end up on the line to pay back the victims.

The best way to avoid this type of Investment Scam is to be hyper-aware of whom you are transferring money for. It’s a good rule of thumb that if you do not know the person or company, don’t do it. If it is someone you know or a company you are familiar with, verify that they are the ones who submitted a money moving request. When in doubt, trust but verify!

2. “Pig-Butchering”

So-called “pig butchering” is when a scammer builds trust with their victims before eventually pressuring them to deposit more and more of their cryptocurrency assets into bogus digital wallets or websites controlled by the scammer. According to an FBI report, the name refers to how scammers, “feed their victims with promises of romance and riches before cutting them off and taking all their money.”

When investing, use accredited and reputable companies to ensure your money is being handled responsibly and safely. Avoid “guaranteed” high investment returns, with supposedly little or no risk. If it sounds too good to be true, it likely is. Only scammers will guarantee profits or big returns. No cryptocurrency investment is ever guaranteed to make money, let alone big money. If you are unsure of the legitimacy of the sellers, use Investor.gov to verify the background of anyone offering you an investment.

3. Social Media

Since 2021, nearly half the people who reported losing cryptocurrency to a scam said it started with an ad, post, or message on a social media platform. With the rise of e-commerce and online marketplaces, it’s easy to get sidetracked and fall for a scam. Some of the “bad players” are not easy to pick up on. Watch out for fake profiles, people with few to no ‘friends’, and those with little to no posts. Always take caution if someone approaches you through social media with an investment opportunity. Pretending to be a friend or mentioning a mutual acquaintance is a common tactic used to gain trust.

The same idea applies to another genre of social media as well, online dating. Be suspicious if an individual you met on a dating or social media website wants you to purchase gift cards or virtual currency, send or transfer money or valuables, or they request to use your bank account. If a new love interest wants to show you how to invest in cryptocurrency or asks you to send them digital currency, it is likely a scam. With these types of scams, the fraud becomes personal and emotional and it’s easy to get pulled in. Similar to ‘pig-butchering’, scammer builds your trust, and it is difficult to believe that they are scamming you. To put it simply, never mix online dating and investment advice.

Protect Yourself with Resources

Although “investment pitches” vary, using fraudulent cryptocurrency investment opportunities to entice targets is becoming a common scam approach. In 2021, $429 million was lost to Investment Scams, according to the FBI’s Internet Crime Complaint Center. You can protect yourself by setting up security alerts with your bank and in your investment portfolio. The scammers may get a representative from the “bank” on the phone to back up the story (pro tip: it’s not the bank.) If you are at all in doubt, call the bank yourself using an official number sourced from the bank’s website. As investing and cryptocurrency grow in popularity so will the scams. If you are in doubt, check it out. Trust your gut feeling.

Written with help from our friends at 3Chopt Investment Partners.