Investor Alert: Relationship Investment Scams
The SEC's Office of Investor Education and Advocacy (OIEA), the Commodity Futures Trading Commission's Office of Customer Education and Outreach (OCEO), the Financial Industry Regulatory Authority (FINRA) and the North American Securities Administrators Association (NASAA) are issuing this Investor Alert to warn investors about relationship investment scams, where fraudsters -- including criminals and other bad actors -- often hide their true identities, reach out to unsuspecting targets (often online or through text messages), gain their trust over time, and then defraud them through fake investments. Relationship investment scams are sometimes referred to by various terms including romance scams, "cryptocurrency" investment scams, financial grooming scams, and even the distasteful term "pig butchering scams." These scams also sometimes involve "catfishing," where fraudsters might set up fake online identities to carry out crimes.
Criminals and other fraudsters seek their targets in many different ways. They often initiate contact online or on social media platforms -- including professional networking, dating and messaging websites/apps. They might run advertisements or add targets to a group chat that the target didn't seek to join. Fraudsters might text a target pretending to be an old friend or claiming to have contacted the target accidentally. They might even use an auto dialer to blast out unsolicited text messages to thousands of people -- these messages are designed to mimic ones intended for some other personal or business acquaintance, seeking to prompt a response from potential targets. They might offer financial advice or express romantic interest. Sometimes, these fraudsters quickly move communications away from the initial platform to a different, sometimes unmonitored space.
These scams sometimes are referred to as "long cons," meaning there's a long, slow build before the fraudster springs their trap. Once they find a target who's willing to engage with them, these fraudsters begin the long process of building their trust, be it through friendship, romance, or an offer to help achieve financial goals. They might even suggest meeting in person but then come up with excuses so that this never happens. In romance scams, they often pledge their love very quickly. Their goal is to gain the target's trust and confidence.
Source Fool.com
