Investment Scams
April 1, 2025
Investment scams are often obvious and sound too good to be true, but do you know how to differentiate between a real offer and a scam? Below are some common investment scams and advice on how to identify and report them.
Common Investment Scams
- Ponzi and pyramid schemes – In a Ponzi scheme, earlier investors receive returns from the capital provided by new investors rather than earned profit. In a pyramid scheme, participants make money by recruiting others to take part in the venture.
- Boiler room scams – Pushy salespeople try to convince investors to purchase overvalued or non-existent securities.
- Pump and dump schemes – Scammers promote certain stocks to raise their value and then sell their shares.
- Advance fee fraud – Investors are charged upfront fees with the promise of large returns that never materialize.
- Cryptocurrency scams – Include fake initial coin offerings (ICOs), pump and dump schemes, fraudulent exchanges, and more.
- Affinity fraud – Members of certain groups, such as religious or ethnic communities, are targeted by exploiting their trust and shared affiliations.
Red Flags
- Guaranteed returns.
- Sense of urgency.
- Details and information are unclear.
- Unsolicited calls and messages.
- Sounds too good to be true.
How to File a Report
If you believe you have been targeted by an investment scam, call the Department of Financial Protection & Innovation at (866) 275-2677, send an email to [email protected], or submit a complaint at https://dfpi.ca.gov/submit-a-complaint/