The promise of “guaranteed” returns or the chance to get in on the “next big thing” can be tempting. Unfortunately, scammers prey on this excitement by offering fake or misleading investment opportunities. Knowing the red flags can help you protect your hard-earned money.
Common Types of Investment Scams
- Ponzi Schemes.
- Early investors are paid returns from the money of newer investors—not from actual profits.
- These eventually collapse when new investors run out.
- Pump-and-Dump Scams
- Fraudsters hype up a low-value stock to inflate its price, then sell their shares at a profit—leaving others with losses.
- “Guaranteed” High-Return Investments
- No legitimate investment is risk-free. Be cautious if you’re promised big returns with little to no risk.
- Cryptocurrency Scams
- While some crypto is legitimate, scammers create fake coins, exchanges, or “too good to be true” offers to steal money.
- Affinity Fraud
- Scammers target people through shared communities (such as religious groups, clubs, or professional associations) to build false trust.
Red Flags to Watch Out For
Two-factor authentication adds an extra layer of protection by requiring something you know (your password) plus something you have (a code sent to your phone or generated by an app).
- Pressure to act fast. “Limited time offer” or “you’ll miss out” tactics are common.
- Unregistered sellers or investments. If someone can’t prove they’re licensed, walk away.
- Complicated or secretive strategies. If you don’t understand how the investment works, don’t invest.
- Lack of official paperwork. Legitimate investments come with clear disclosures and documentation.
- Guaranteed returns. Every real investment carries some level of risk.
How to Protect Yourself
- Do your research. Verify licenses through the SEC or your state securities regulator.
- Talk to trusted advisors. Consult with your credit union or a licensed financial professional before committing.
- Avoid sharing personal info: Don’t provide Social Security numbers, account numbers, or passwords to anyone promising an investment opportunity.
- Take your time: Scammers rely on urgency—slow down and double-check.
Bottom Line
If an investment sounds too good to be true, it usually is. Protecting yourself starts with skepticism, research, and seeking advice from trusted sources before handing over your money.
Have questions about investments or want a second opinion before committing to one? Visit IC Credit Union ‐ Get in Touch to connect with us today.
Disclosure: Check the background of investment professionals associated with this site on FINRA’s BrokerCheck.
Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. IC Credit Union and IC Investment Services are not registered as a broker-dealer or investment advisor. Registered representatives of LPL offer products and services using IC Investment Services, and are employees of LPL. These products and services are offered through LPL or its affiliates, which are separate entities from, and not affiliates of, IC Credit Union or IC Investment Services. Securities and insurance offered through LPL or its affiliates are:
Not Insured By NUCA or Any Other Government Agency | Not Credit Union Guaranteed | Not Credit Union Deposites or Obligations | May Lose Value
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