Protect your money from investment fraud. Learn how to spot the red flags of Ponzi schemes, crypto scams, and aggressive sales tactics before you invest.
Article: 5 minutes
Updated: October 16, 2026 Published: October 16, 2026
By: USAA Reviewed by: Editorial contributors
Investment scams often promise fast profits with little or no risk. Scammers often prey on our sense of urgency, pressuring you to act quickly without taking time to think about the situation. Understanding the warning signs can help you identify investment scams.
Maybe you’ve received an offer in the mail or via email guaranteeing to double your investment or grow your money risk-free. But before you leap at this opportunity to make easy money, keep in mind that if it seems too good to be true, it likely is. It can be easy to fall victim to an investment scam, whether you’re an experienced investor or a beginner.
Scammers often promise unbelievable returns on your investment, guaranteeing that you’ll make money with little to no risk. They might prey on your sense of urgency, rushing you to make a decision to invest before you have time to weigh the pros and cons. If you ask questions about this too-good-to-be-true investment “opportunity,” they’ll likely avoid clearly explaining how the investment works or how your money will be used. By being alert, you can avoid investment scams and protect your savings from fraud.
If you’re thinking about making an investment, these warning signs should make you pause.
All investments carry risk. If someone promises you unusually high or guaranteed returns, risk free, it should be a sign to step back and reconsider. Scammers often make claims like “double your money fast” while minimizing or ignoring the possibility of losing money instead.
Fraudsters often create a sense of urgency to rush you into a decision. They don’t want you to have time to research the investment offer or ask any questions. Often known as an “act now” pitch, they may say things like “this offer expires today” or “don’t miss out before everyone else gets in on the deal.” Legitimate investment professionals will give you time to review documents, ask questions and make informed decisions.
If the investment company isn’t properly registered with regulators, it should be a major warning sign that the investment “opportunity” isn’t legit. Before investing, check out the individuals or company:
Scammers often rely on confusing language and jargon to convince you they are knowledgeable and trustworthy. They might also claim to have a “special system” that other investment professionals don’t understand. But if you ask questions, they won’t give clear, direct answers or explanations about how the investment works or where your money will be going. That should give you pause. Before you make an investment, you should fully understand what you’re getting into. If someone can’t or won’t explain it fully, walk away.
Legitimate investment professionals and brokers use traditional payment methods, like cash, check or credit cards. Other options are harder to trace and recover if you suspect fraud. Be cautious if someone asks you to:
Investment fraud continues to evolve, especially with the growth of social media, messaging apps and online networking. While the approach might look a little different, these scams remain the same.
A Ponzi scheme uses money from new investors to pay returns to earlier investors instead of using it to generate legitimate profits. Similarly, pyramid schemes rely on money generated by recruiting additional investors rather than selling actual investments or products. The scams might seem successful at first, but eventually collapse when new money stops coming in.
To identify a Ponzi or pyramid scheme, keep an eye out for these warning signs:
There has been an explosion in recent years of crypto scams. One common tactic is known as “pig butchering,” where scammers build trust over time using dating apps, messaging apps and social media. Once they’ve got your trust, they convince you to invest in fake cryptocurrency platforms, possibly sharing faked screenshots of alleged profits and pressuring you to keep investing more money.
Not all cryptocurrency investments are scams, but limited regulations and fast-moving hype make it easy for scammers to succeed. If you’re considering digital assets like crypto, make sure you understand the risks, because crypto transfers cannot be easily reversed. Don’t rely on online strangers or influencers for investment advice.
In a pump-and-dump scam, fraudsters artificially inflate the price of a stock, often a low-priced or low-traded stock, through misleading promotions. After prices rise, scammers sell their shares. Other investors are left with losses as prices crash.
These scammers often boost the price of a stock through word-of-mouth, creating buzz using:
Promissory notes are like IOUs: They’re written promises to repay borrowed money, usually with interest. They’re not always scams, but some bad actors use fake promissory notes to promise high returns with little to no risk. Scammers often promise the investments are safe, insured or backed by guaranteed income streams. Often, it turns out that they aren't, and the scammers have no intention of honoring the promissory note.
Before committing any money to an investment, take time to do a little research. Just a few steps can help you avoid fraud and protect your money.
Make sure the person or company you’re considering investing with is registered. You can search the individual or company using a reputable database like BrokerCheck or investor.govOpens in New Window. Check to see if there have been any complaints filed against them and review any disciplinary history.
Don’t rely on their marketing materials or testimonials, which can all be faked. Check SEC filings for regulatory actions, consumer complaints and news coverage; avoid relying solely on social media recommendations or online hype.
Before investing, don’t hesitate to ask questions. The broker or investment company should be able to fully and clearly answer your questions, including:
Scammers often pitch their investment opportunities through phone calls, emails, texts or social media. Treat cold calls or unexpected offers with caution.
If you think you’ve been the victim of fraud, it’s important to act quickly.
Question: Can I get my money back if I was scammed?
Answer: Sometimes. It depends on the type of scam, the payment method and how quickly you report the fraud. Some wire transfers or cryptocurrency payments can be difficult to recover, but going to the policy quickly can help limit your losses.
Question: How do I check if an investment company is legitimate?
Answer: Searching FNRA’s BrokerCheck, the SEC’s EDGAR database and investor.gov can help you verify the investment company’s registration and check for any disciplinary actions before you invest any money.
Question: Are all crypto investments scams?
Answer: No. Some crypto investments are legitimate. But crypto scams are common because digital assets can be transferred quickly, and there is much less oversight than with traditional investments. Before investing in crypto, do your research, and steer clear of opportunities that promise guaranteed profits or urge immediate action.
Get help identifying potential scams, explore resources to help you stay safe and find out how to report suspicious activity.