What to Do if You Are a Victim of a Scam

If you are the victim of fraud, inform the authorities right away. The sooner government officials are involved, the better your chances of fraud recovery.

• Report scams to the Federal Trade Commission (FTC) and the Commodity Futures Trading Commission (CFTC).
• Victims of investment scams may be able to recover their losses with the help of a securities attorney. Call (877) 600-0098 or email info@kurtalawfirm.com.
• Crypto scams should be reported to the FTC, the CFTC, and the Securities and Exchange Commission (SEC).
• For scams that are non-investment related, report to the FTC: 1-877-382-4357.
• Report disaster relief scams (including scams related to coronavirus/Covid-19) to the National Center for Disaster fraud: (866) 720-5721.
• Victims of scams should also file a report with their state consumer protection office.
• You can also file complaints with the Internet Crime Complaint Center.

Stats for Victims of Scams

Covid-19 and the subsequent economic depression resulted in a major increase in scams. Fraud losses increased by more than 70% in 2020. In 2021, the Federal Trade Commission received 2.8 million fraud reports. Most of these scams are imposter scams (e.g., email phishing scams) followed by online shopping scams. Increasingly, scammers look for victims on social media, and the FTC reports consumers reported $770 million in social media fraud losses for 2021.

Investment Scams

Investment scams are also on the rise. FINRA has its own scam recovery advice tailored specifically to investors.

The good news for victims of fraud: If your stockbroker or financial adviser is registered with FINRA or the SEC, you may be able to recover your money. The brokerage firm may be compelled to cover your losses, even if the broker is unable to pay.

To make sure you are working with a registered broker, check your broker’s Central Registration Depository (CRD) number. Search the number on BrokerCheck or the Investment Advisory Public Disclosure. FINRA published an “Investor Insight” bulletin that advised potential investors to look for typos and out-of-place fonts in a BrokerCheck profile. These may indicate that a fraudster has sent you a fake registration page. Investors should also make sure that all the information on the profile – including their location – matches the information provided.

Most Common Types of Investment Scams

Investors should be aware of the most common examples of investment fraud. Frauds often follow a trend, as we have seen with the recent boom in cryptocurrency frauds.

• Cryptocurrency scams. A typical crypto scam advertises cryptocurrencies at a reduced rate. After you provide your crypto wallet credentials, the scammers can then steal your cryptocurrency. Avoid any advertisements for discount crypto. Also, do not respond to anyone reaching out to ask you to invest in crypto.
• Pump-and-Dump Schemes. Pump-and-dump schemes often go hand-in-hand with cryptocurrency scams. These types of investments persuade investors to purchase a low-price security or cryptocurrency coin. Once enough investors purchase the security or coin, the value of that asset will significantly increase, at which point the scammers will sell all their shares at a massive profit, causing the value to plummet. Victims of pump-and-dump schemes often lose their entire investments.
• Ponzi Schemes. Ponzi schemes endeavor to recruit investors by advertising an excellent investment opportunity. Instead of investing, the Ponzi scheme recruiter uses the money to pay off previous investors, representing that the payments are returns on the investment. In reality, there is no money-making enterprise of any kind – meanwhile, the recruiter is keeping plenty of the money for themself.
• Pyramid Schemes. The key to a pyramid scheme is the focus on recruitment, rather than the investment product. Pyramid schemes persuade new participants that their investment will go further if they can recruit new investors. Each participant pays a portion of the money earned from new investors to their recruiter. The recruiters at the top of the pyramid reap the financial benefits, while more recent recruits simply lose money.
• Elder Financial Abuse. The elderly are especially likely to be victims of scams, including investment fraud. Seniors should be especially careful entrusting their wealth to a broker or financial adviser and remain vigilant with their account reviews.
• Broker Fraud: The most common broker frauds include unsuitable transactions and churning, a.k.a. excessive trading or commission abuse. Broker fraud can take many forms. Your broker may recommend risky investments to earn higher commissions, or simply execute an excessive number of trades in your account for the sake of lining their pockets with the per-transaction fees and commissions.

How to Recover from Being Scammed

In many cases, there is not much a victim of a scam can do to facilitate fraud recovery besides report it to the authorities. Once you report your stolen funds, a government agency will hopefully be able to recover your money.

The CFTC advises victims of fraud to save all the pertinent information related to the scam. E-mails, screenshots of social media profiles, phone numbers, and any official-looking documents the scammer may have provided – all of these may be relevant to a future investigation and fraud recovery.  

There are a few other steps you can take if you are the victim of a scammer:

• Make sure the compromised cryptocurrency wallet or brokerage account is not linked to any other account.
• Contact your bank and ask them to freeze your account. This will prevent anyone from accessing your funds, including you.
• Look out for scam recovery frauds. Stick to official channels and do not click on online ads.

Help for Fraud Victims

If you are the victim of investment fraud, contact one of our team of securities lawyers today. Our lawyers can evaluate your case and provide a realistic plan for fraud recovery. Contact info@kurtalawfirm.com or (877) 600-0098 today.