• Affinity Fraud: Scammers try to trick members of a group that has formed based on a common characteristic such as age, ethnicity, or religion. Scammers act like they are part of the group to win the trust of the group leader and its members. The scammers hope that if the group leader invests, others will invest too.
• High Yield Investment Programs: Scammers claim you’ll make high returns on your money if you invest with them. They say you’re guaranteed to make money off the investment. Often these investments aren’t real, or they’re really selling stocks that have almost no value.
• Pyramid Schemes: Scammers will tell you that a small investment can earn a large pay out—or profit. But you have to find others to invest too. The “profit” that you get is really just money paid by other investors. The scheme falls apart when the scammer runs out of new investors or takes all the money and runs.
• Ponzi Schemes: A scammer—usually a portfolio manager—says he will invest your money and earn you large pay outs. But the money you get is really just money paid by other investors. The scheme falls apart when the scammers can’t find any new investors to give them money.
• Pump and Dump: Scammers buy cheap stocks and lie to potential purchasers about the quality of the stocks to raise their prices. You might think the stocks are a good investment, so you buy them at a higher price. Then the scammer then sells off the stock at the higher price, the stock price drops, and you’re left with worthless stocks.
• Recovery Room Schemes: Scammers say they’ll help you get back money that you’ve lost in other investment schemes, but they want you to pay them first. After you pay them, they don’t do anything.
• Unsuitable Financial Products: A financial advisor may try to sell you something that earns them a lot of money but is not a good investment for you. Financial products like annuities can take a long time to earn the money you were promised. And if you want to withdraw your money, you might have to pay a large fee. More generally, some financial advisors may bill you for services you didn’t receive or products you didn’t ask for.
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