6 Investment Scams Young Adults Are Likely to Encounter

Although older people are commonly considered the most targeted demographic for investment scams, they aren’t alone. Barclays found that people between the ages of 21 and 30 represent about 24% of all investment scam victims. Young adults don’t usually have enough experience to spot every scam from the start. Some scams seem legitimate at first, especially when it’s presented by someone who seems like they’re just offering to help. 

Whether you’re just getting into investing or trying to navigate legitimate opportunities, understanding how common scams work can help you distinguish a genuine opportunity from a financial trap. 

1. Social Media Investment Scams

You can find plenty of legitimate financial educators on social media, but sometimes scammers blend into the crowd. According to the FTC, more than 38% of all reported fraud cases during the first half of 2023 involved contact on social media. Some ways fraudsters use social media to run their scams include:

• Running ads that direct users to a fraudulent trading platform.
• Scammers almost always show screenshots of fake results, fake testimonials, and profitable accounts in order to establish credibility.
• Fake investors infiltrate group chats to confirm that a certain strategy works.
• Unsolicited private messages can start out as a casual chat and turn into an investment pitch.

To avoid scams that originate on social media, consider each platform a space for getting ideas, but don’t take results at face value.

2. Finfluencer And Stock Tip Scams

Younger investors love looking to popular online personalities for financial advice. This is risky because scammers often create fake, copy accounts using an influencer’s photos, branding, videos, and other imagery. If you’re not paying close attention, you might not realize you’re interacting with a scammer.  

There are also people who hype up thinly traded stocks on social media right before selling their own holdings. It can seem like something big is about to happen, but it’s just manufactured interest. You also need to be cautious of recommendations that could be fueled by a financial incentive rather than a genuine promotion. 

3. Relationship Investment Scams

Some scammers start out by forming friendships and romantic relationships with their target and only introduce financial investment opportunities after they’ve gained some trust. Sometimes these situations start with an intentional text sent to the “wrong number,” where the scammer proceeds to engage in casual conversation for weeks. Sometimes scammers join dating sites and start mentioning investments later.

Even when you think someone you’ve met online or are dating is trustworthy, it’s smart to remain skeptical if they introduce you to an investment opportunity. 

4. AI-Powered Impersonation Scams

Scammers are now using AI to generate fake videos, cloned voices, and realistic documents. Since AI can imitate recognizable voices, a well-disguised scam account might be believable if you’re not paying close attention. If you’re not familiar with AI-generated photos, you might get fooled by accounts that look like real people.

5. Fake Job And Task Investment Scams 

Some investment scams start off as a job where you earn fake commissions for rating products, engaging on social media, or completing repetitive tasks. These scammers usually pay you at first so the opportunity looks legitimate, but eventually you’ll be required to contribute money to get access to more tasks and higher payouts. Some scammers won’t pay you at all until you pay them.  

Any opportunity that requires you to pay up front to receive money you’ve already earned is a red flag.

6. Guaranteed Return Investment Programs 

One of the oldest scams in history is one in which a scammer promises unusually high returns with minimal chance of loss. Always be wary of opportunities promising guaranteed profits with little to no risk. Understanding what counts as securities and investment fraud can help you recognize when an opportunity might be a scam before you hand over any money.

Protect Your Money

It’s smart to get into investing early, but scammers are out there, and you need to be careful. Before sending anyone money, research them through independent sources. Taking a few minutes to verify an opportunity can protect you from losing money you worked hard to earn.