Online investment scams are a growing problem in our digital world. Beyond the money lost, there are many victims who feel helpless once they realize they’ve been scammed. Online investment scams take many forms, but there are a few key red flags to spot them in the wild.

Signs of an online investment scam

You’re pressured to invest quickly

Scammers know that the longer you have to think about an investment opportunity, the more likely you are to realize it’s a scam.

High returns, low-risk investments

Promising high returns on a no-risk investment. It sounds too good to be true because it is. Promising extremely high returns with zero risk is a common tactic scammers use to lure in unsuspecting victims. Even legitimate investments with high returns come with significant risk, so if an investment claims to offer both high returns on no-risk, it’s likely too good to be true.

Out-of-the-blue opportunity

The investment opportunity comes out of the blue. Con artists usually target people they don’t know, typically through unsolicited phone calls, emails, or social media messages. Don’t let their sense of urgency pressure you into making a quick decision that could cost you your money and peace of mind.

You’ve been specially chosen to invest

On the flip side, you’ve been specially chosen to invest. Scammers may try to gain your trust by claiming they’re only accepting a select few investors. They may even use fake testimonials by paying off other scammers to act as satisfied investors who claim big profits using their services.

There is a “special algorithm” designed to increase profits

They have a special or secret algorithm designed to guarantee and maximize profits. This claim could be anything from a proprietary system for investing in binary options to stock picking software that will beat the market every time. There aren’t algorithms that do this, but scammers will say just about anything if it might influence their victims.

Common types of online investment scams:


This scam usually involves an email from a seemingly legitimate company asking you to log into your account through an embedded link to begin your investment. The link takes you to a fake site that’s designed to look real but actually steals your personal information.

Pump and dump

In this scam, the fraudster buys a large number of shares in a stock at a very low cost. They then convince other people to buy the stock, which drives up the price. Once prices get high enough, they sell their own shares at a huge profit and leave the other investors with nothing.

Advance fee schemes

In these schemes, con artists demand payment from investors who are eager to get involved in private deals or limited investment offers. After receiving payment from the investor, the fraudster keeps it for themselves and never invests it as promised, or disappears entirely.

Pyramid schemes

These schemes offer investors high rates of return on their investments by recruiting other investors into the scheme. New recruits are asked to bring in new members

The most important thing you can do to protect yourself is research the company thoroughly before sending in your investment. Rather than putting your money in risky investments, be wary of anything that promises you a return that’s too good to be true. Remember: if it seems too easy, it probably is. While not every opportunity is a scam, there will always be scammers that prey on unsuspecting victims. 

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