JEFFERSON CITY, Mo. – Missouri Attorney General Catherine Hanaway is warning Missouri consumers of investment scams that deceive victims into investing money in fraudulent projects or fictitious assets. Securities scams targeting consumers may include pyramid or Ponzi schemes, high-yield investment fraud, “pump and dump” schemes, advance fee schemes, real estate investment fraud, and cryptocurrency scams.
“Our Office is working hard to pursue anyone who preys on your financial goals and misuses trust. Bad actors who target the money families rely on for their future will be held accountable,” said Attorney General Hanaway. “I urge Missourians to verify claims, ask tough questions, and report suspicious activity. Please know, if the worst happens to you, we are here to help.”
Common types of investment scams:
- Ponzi and Pyramid Schemes: These rely on a constant flow of new investor money to pay existing investors, creating the illusion of profit. The schemes inevitably collapse when new recruitment stops.
- “Pig Butchering” (Relationship Scams): Scammers build trust over weeks or months through social media or dating apps before luring victims into fake investment platforms, typically involving cryptocurrency, where all “profits” are fake and the money is stolen.
- “Pump and Dump” Schemes: Fraudsters hype up a low-priced stock or asset (like a new cryptocurrency) to inflate its price, then quickly sell their own shares at a profit, leaving other investors with worthless assets.
- Advance Fee Fraud: Victims are persuaded to pay an upfront fee (e.g., for taxes or administrative costs) to access a promised large return, which never materializes.
- Boiler Room Scams: High-pressure salespeople working from temporary offices make unsolicited calls to push overvalued or non-existent securities, often using high-pressure tactics.
Tips to avoid investment scams:
- Be Skeptical of Promises: No legitimate investment can guarantee high returns with little to no risk. If an offer sounds too good to be true, it probably is.
- Do Your Own Research: Never invest based solely on an unsolicited offer (cold call, email, text, social media message). Verify all claims independently.
- Resist Pressure Tactics: Legitimate advisors will not pressure you to invest immediately or discourage you from seeking a second opinion from a trusted financial advisor or friend.
- Understand the Investment: Avoid any investment if the details are vague, overly complex, or “secret.” Ask for all information, including a prospectus or financial statements, in writing.
- Be Wary of Unconventional Payment Methods: Scammers often ask for payment via wire transfers, gift cards, or cryptocurrency because these methods are difficult to trace and reverse.
- Protect Your Personal Information: Do not share sensitive financial information or identity documents (Social Security number, bank details, etc.) with anyone you don’t know who contacts you online.
Steps to take if you are a victim:
- Document everything related to the scam, including names, contact information, and communications.
- Notify your bank or financial institution immediately to protect your accounts.
- Report the fraud to the authorities: contact the Missouri Attorney General’s Consumer Fraud hotline at 800-392-8222.
Just as the Consumer Protection Section exemplifies the Attorney General’s Office’s commitment to safeguarding Missourians, the Office is proud to be home to some of the state’s most skilled consumer-protection attorneys. These dedicated professionals investigate and prosecute deceptive and fraudulent practices, working tirelessly to hold bad actors accountable and secure justice for victims.
Attorney General Hanaway encourages anyone who believes they have been targeted or victimized by a scam to contact the Attorney General’s Consumer Protection Hotline at 800-392-8222 or file a complaint online at ago.mo.gov.