In the ever-changing world of fraud, scams take many forms in order to lure potential victims. Each year, threat actors devise new fraudulent tactics, contributing to the steady rise in global financial losses. According to the latest report published by the Global Anti-Scam Alliance (a major umbrella organization, of which Outseer is an active member) consumers across 42 surveyed countries lost more than $442 billion to scams over the past year. This figure exceeds the GDP of major nations, including South Africa, Finland, or Egypt.
Therefore, scam detection has become an issue of utmost importance. Among these evolving threats, investment scams have emerged as a particularly prevalent and financially damaging trend. This article addresses the global impact of investment scams, explains the processes behind this growing threat, and provides investment scam detection guidance to prevent further harm.
How Investment Scams Work
In an economic landscape defined by uncertainty, the promise of fast, easy, and high-return investments may sound very appealing for many individuals. This context is widely exploited by threat actors through investment scams.
This type of scam involves fraudsters pressuring their targets to “invest” money in a rare financial opportunity that promises quick returns. In order to succeed, fraudsters typically use social engineering tactics to appear trustworthy and convince their victims.
Social engineering refers to the manipulation of the natural human tendency to trust. Criminals often rely on deceptive and pressuring discourse to lure their victims into their trap. They also frequently use the brand of legitimate investment entities, impersonate celebrities, and create fake website and company profiles to appear more believable.
As such, the image of your financial institution may be abused by threat actors for fraudulent purposes.
Investment Scams Global Trends
The Global Anti-Scam Alliance reported that investment scams were the second most common scams in 2025, second only to shopping scams. Additionally, the US Federal Trade Commission documented that in 2024 more than $5.7 billion was lost due to investment-related fraud in the United States alone. Furthermore, UK bank Barclays has revealed that investment scams account for £1 in every £3 lost to fraud for their customers, with the average investment scam amounting to roughly £15,564. While investment scams may be lower in raw volume, they carry the greatest economic impact.
Although investment scams may take various forms, threat actors usually rely on a set of social engineering tactics to deceive their victims. These methods include:
- False advertising through social media presence, newsfeeds and search engines with AI-generated fake endorsements from celebrities or well-known business figures.
- Setting up online platforms that appear legitimate by using brands and logos from genuine investment companies.
- Professional-looking documentation to justify investments.
- Proactive outreach by contacting targets directly via social media (Facebook, Instagram) or messaging apps (WhatsApp, Telegram).
Once the contact is established, fraudsters pressure their victims into investing as quickly as possible. As such, the vast majority of investment scams occur within 24 hours of the initial contact.
Different Types of Investment Scams Explained
Investment scams are a broad category of fraud that encompass multiple types of scams and strategies employed by threat actors to extort their victims. These criminals may even use a combination of elements from different types of fraud in order to appear more convincing.
Cryptocurrency Scams
Fraudsters use social media and messaging apps to promote crypto investments and fraudulent mining activities. They typically build professional-looking websites and platforms to persuade their “customers” to invest with their fake firm, before disappearing after the initial payments are made.
Impersonation Scams
Fraudsters impersonate the identity of an official from a renowned financial institution to gain the trust of potential victims. They use the public image of a real person on social media and messaging apps to advertise their fraudulent investment schemes.
Clone Firms Scams
Similar to impersonation scams, but on a larger scale. Fraudsters abuse the image of an entire financial institution by creating fake companies that perfectly mimic legitimate investment firms. They use stolen names and logos and may even copy firm reference numbers and entire websites to appear identical to their legitimate counterparts.
Ponzi Scheme
Fraudsters claim to have built a remarkable and rare investment scheme promising high returns within a handful of days. They may present testimonials from supposed customers vouching for them. In reality, no genuine investments are made. Initial investors are paid returns using funds provided by subsequent investors. This highly unsustainable pyramid is destined to collapse and, once its limits are reached, the fraudsters typically disappear with the remaining funds.
Foreign Exchange Trading Scams (or FOREX Scams)
FOREX is the decentralized global market for currency trading. Fraudsters take advantage of the general lack of public knowledge regarding FOREX regulations to offer unauthorized trading activities through platforms designed to resemble legitimate trading environments.
Affinity Fraud
This type of fraud relies on the trust and social bonds within a specific group (e.g., religious, ethnic, or cultural communities). Fraudsters first manage to infiltrate the group, often through social media, by presenting themselves as trustworthy members. They then promote fake investment opportunities to unsuspecting individuals within the community.
Investment Scam Prevention for Financial Institutions
Investment scams present a unique challenge for financial institutions because much of the attack takes place outside their direct control. By the time a customer initiates a payment, they have frequently already been manipulated. This makes financial institutions the last and most critical line of defense.
The different components of an attack need to be considered as an interlinked series of events—part of a scam attack chain. We describe how financial institutions can approach investment scam detection throughout the attack chain.
Pre-attack
Looking at the scam attack chain, we can see there is a cyber component to the attack—the fraudsters need to set up infrastructure to support the social engineering of customers. This includes websites, email and instant messaging accounts. Outseer has our FraudAction Cyber Intelligence service which is capable of spotting these and then actively shutting them down. This constantly monitors fraud communication channels and underground marketplaces in search of such schemes. It is also capable of taking in intelligence from FI’s in the post-attack stage where other scam vectors have been identified (whether successful or not) and then managing the takedown and intelligence gathering from them.
Victim Compromise
During the victim compromise phase, user education is often seen as key to avoiding investment scams, so wary users may learn to identify fraud by spotting a series of red flags.
In order to avoid falling into the trap of investment scams, where wary users may learn to identify such fraud by spotting a series of red flags. These include unrealistic promises of high returns with minimal risk over a very short period of time, high-pressure sales tactics that rely on the emotional response of the target, unsolicited initial contact from the “investment firm”—as legitimate entities very rarely reach out unsolicited—and unlicensed sellers or unregistered products.
But we recognize that education on its own is not enough, with controls such as AI based scam checkers or adaptive intervention based on risky signals during digital banking now being more effective.
Transaction
Outseer has AI-based models for scam prevention that leverage contextual intelligence, including native behavioral biometrics, transaction patterns, and device profiling, to identify nefarious activity.
Recipient
Looking at money movement is also a vital component of scam detection, which is why Outseer customers can leverage their existing solution for real-time money mule detection.
Investment scam prevention is complex, with both technical and emotional attack surfaces exploited to deceive targets. Outseer is committed to looking across the full path of investment scams to deliver better protection for customers as this threat continues to expand.
Click here to learn more about our scam prevention solutions.
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