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Investment Scams Awareness

Life & Finances

Father and daughter

Investment Scam Awareness

There’s a scene near the end of almost every action movie when the hero seems like they’re about to give up. They’re exhausted from fighting, they’re out of resources, and the villain is gloating, ready to declare victory. Then suddenly, a beloved sidekick swoops in to join the fight with a funny quip, and the hero ends up saving the day.

In times like these, with a struggling economy, inflation, and everyday struggles, we could all benefit from the sudden appearance of a hero or beloved sidekick to solve our problems. You’ve probably overheard members joke about how they wish they hit the lottery or receive news that they’re the long-lost cousin of a wealthy celebrity who has left them an inheritance. Unfortunately, the desire for an unexpected windfall of “free money”, combined with the desperation to cover piling bills can make people susceptible to fraud.

Let’s take the story of a member we’ll call Joe Smith. Joe’s pretty savvy about the constant ads he sees via email, texts, and phone calls, and usually blocks them or sends them to the spam folder.  But, as fraudsters know, all it takes is a moment of weakness. Maybe just for one moment, Joe thinks about his family’s tight budget and those high grocery and gas bills. Maybe he’s been seeing how interest rates keep climbing and his credit card debt seems insurmountable. Maybe, he thinks, one of these offers sounds pretty good, and there’s no harm in listening to just one…right?

A few weeks later Joe befriends Arnie, someone he “met” online who just happens to be a “successful investment advisor.  Arnie and Joe begin to regularly message and chat, where they develop a trusting personal relationship.  Arnie empathizes with Joe’s financial situation and because he cares, Arnie turns him on to a crypto investment website.   Joe is skeptical, at first, but Arnie assures him that Joe wouldn’t be sending Arnie this money; Joe would be “investing” it, and after it grows, he can make a withdrawal at any time.  No RISK, right?

Joe agrees, and Arnie walks Joe through creating an online account to invest $500 with promises of making a quick turnaround of $5,000.  It sounds too good to be true, but Joe trusts Arnie and could really use the money to get ahead and create a little financial breathing room.  Arnie sends Joe a link to a site that looks legitimate and professional, so Joe creates an account and sends his $500.   Joe logs in regularly and to his surprise, sees his initial investment has grown substantially in a short amount of time.  He requests a withdrawal and gets a check in the mail for some of his profits, and he’s hooked. He thinks, “If I can make this kind of money with $500, imagine what I could earn if I invested a much larger dollar amount!”

Joe was ALL IN! He took out a loan on his retirement funds and was sure he’d make enough money to pay that loan back and pay off all his debt in the next couple of months.  Joe runs this idea past Arnie, and Arnie agrees it’s a “smart” decision.

Joe withdraws $250,000 from his retirement funds and visits his local credit union branch to initiate a wire transfer to the crypto company.  The activity is not normal behavior for Joe, so the credit union branch representative assisting him asks additional questions.  Joe insists it’s legitimate; his “close” friend, Arnie, referred him to the investment and he’s already seen and received some profits from an initial investment.  Joe authorizes the wire request despite the credit union’s attempts to warn him of the red flags urging him to be cautious.  Joe repeatedly reassures the staff he knows and trusts Arnie.  After all, they chat all the time and have a strong relationship built on trust and communication.

Two months pass and Joe is pleased to see that his investment has grown to $1M.  He’s ready to take a withdrawal and is already strategizing how to pay off his debt and plan a much-needed family vacation.  There is only one problem – he can’t seem to figure out how to submit a withdrawal request or reach any website support, and worst of all, his friend Arnie is MIA.  Despite his attempts to access his funds, the account eventually gets disabled, and Joe realizes that the website was a fake and he’s the latest investment scam victim.  Joe’s financial condition is now far worse than it was before, with small to no chance of recovering any funds.

This type of investment scheme is a popular scam referred to as pig-butchering, which involves fraudsters gaining the victim’s trust, and introducing the investment “opportunity”, and collecting a substantial amount of the victim’s money, then disappearing. The fraudsters first cultivate trust and friendships with unsuspecting victims with the initial contact being made online, text, or phone. Once that trust is gained, the Fraudsters persuade their victims to invest in fraudulent crypto schemes, sometimes via fake websites built to look like legitimate trading platforms. These scams can go for weeks, months, or even years.  At times, the victims will receive small returns to trick them into believing the scheme is legitimate.  At some point, their funds are held hostage unless fees are paid, or their funds simply just disappear.  Unfortunately, since the victims often feel humiliated and betrayed, they are reluctant to report just how much they’ve lost, which is often their lifesavings.

If you believe you are a victim of a scam, contact us immediately.