How to Tell If Investors Are Fake

How can you tell if investors are fake

Investors making too-good-to-be true promises may be duped into signing contracts by fraudsters who minimize risks while exaggerating statistics and testimonials in their offers.

Fraudsters target potential victims via email, instant messaging or social media and pressure them into making hasty decisions, often using “crypto” assets in their schemes.


Investment fraudsters use websites to attract investors with false information. Such websites often promise unrealistically high returns on investments or may make vague statements that are difficult to verify. Fraudsters may even pose as brokers, investment advisors, or sources of market intelligence on social media to deceive clients into investing with them.

Search the site for obvious spelling and grammar errors; these should serve as an early warning signal. Even major corporations make some errors on their sites from time to time; if these appear regularly then be wary.

Avoid investing in companies that rely on social media and online forums to generate fake news and excitement in listed shares, also known as ‘pump and dump’ schemes. In such practices, investors artificially inflate the share price through purchases (‘pump’) only to unload them later for profit (‘dump’), leading other investors to incur substantial losses. Legitimate companies won’t use this method to attract investors; rather they should register with relevant regulators while providing accurate, detailed information on their website(s).

Phone calls

Every year, thousands of Pennsylvanians fall victim to investment fraud; but by maintaining a healthy dose of skepticism and learning to identify certain red flags, you can protect yourself from becoming another victim.

Do not invest in programs promising huge profits with minimal risk. Such promises may be based on unsubstantiated statistics or testimonials from others who claim they’ve already made big bucks; or they could even relate to current events. Reputable investment professionals will provide comprehensive details about an opportunity and its associated risks before asking you for your money.

Be wary if the promoter downplays risk or makes written risk disclosures sound like formalities required by government, making it harder to recover your losses later on. Also be wary when investing in microcap stocks or similar low-priced shares as these may be susceptible to market manipulation by fraudsters who spread negative rumors so as to buy and then “pump” (sell) back onto the stock in order to artificially decrease its price.


Letters remain an effective form of business communication. By understanding how to write letters correctly, you can avoid scams and protect your reputation. In addition, being aware of what types of letters to expect from others (for instance from psychics claiming they can see something in your future and demanding money for it) will enable you to better anticipate potential scams like pyramid investment schemes and protect against them.

To teach children the differences between formal and informal letters, gather various types of correspondence from people around them and divide the letters into two categories – personal letters from individuals and formal business letters – using sorting techniques. Next, have them compare characteristics between each group to identify what differentiates them, then draw up a chart recording their findings – this may enable them to recognize that formal and informal letters differ primarily in style.

Social media

Investors rely heavily on social media for investment news updates, but fraudulent actors may take advantage of its convenience and anonymity to spread false information and spread fraudster-created mistrustful misperceptions.

Fraudsters may employ celebrity endorsements and testimonials as an attraction for potential investors, even hiring actors to play the part of those who have benefited from investments – this can create a false sense of security leading to fraudulent transactions.

Fraudsters may manipulate stock prices by spreading false rumors on social media and then purchasing and selling shares, known as “pumping up” or “dumping”.

Be wary of any messages asking you to send money or click on malware-laden links; these could be scam attempts. Additionally, avoid making investments based on messages posted from social media accounts of brokers or investment advisers; instead use their phone number or website listed in their SEC filings as contact points.

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