Investment fraud red flags

There's no such thing as high guaranteed returns. Promises of big gains with little risk, pressure to act now, and sellers you can't verify are the classic signs of investment fraud.

Easy8 min to readFree

You'll need

The name of the person or firm pitching you

What to know

Be suspicious of high returns with little or no risk. Every investment involves risk (Investor.gov).
Slow down when someone pushes you to act now, says the deal is only for a few people, or claims inside information (Investor.gov).
Watch for pitches that stress how many others are investing, or that paint a picture of your life once you're rich (Investor.gov).
Look the seller up. Investor.gov lets you check whether an investment professional is currently registered or licensed (Investor.gov).
Ask questions. Any reputable professional will let you take your time to research (Investor.gov).

Watch out. Scammers impersonate real advisers, copying their names and firm logos on social media and fake websites. Verify you're talking to the real person (Investor.gov).

Good to know

Online and crypto pitches

The SEC warns that social media, trading apps and new technology create openings for scammers, often starting with a direct message or a "wrong number" text (Investor.gov).

If it's too good to be true

Compare promised returns with ordinary market indexes. Anything promising far more could be highly risky or a fraud (Investor.gov).

Hard to get back

Money lost to a fraudulent offering may be difficult or impossible to recover (Investor.gov).

Sources

U.S. Securities and Exchange Commission Protect your money: how to avoid investment scams (Investor.gov)
U.S. Securities and Exchange Commission What you can do to avoid investment fraud (Investor.gov)
U.S. Securities and Exchange Commission 10 red flags that an unregistered offering may be a scam (Investor.gov)

Lesson M9.5 · Last checked October 2, 2026 against the sources listed. See a mistake?