Scams change fast. But the playbook is often familiar. Scams frequently work because they create urgency and push us to act before we can think or verify what’s happening. They exploit our emotions and sometimes even impersonate people we already trust. But knowing how they work and how to avoid them can go a long way to keeping you safer online.
This is Scam #1 in our Scam Library. Click the link to learn more about common scams and how you can protect yourself from them.
The Scam
The rise of crypto and ease of digital trading have modernized the scam of good old fashioned snake oil sales. There’s a social media influencer industry for every topic under the sun, and finance is no exception. As a result, there are many unlicensed financial advisors out there willing to scam naive investors.
Aside from just giving dubious advice, some of these influencers may offer free bonuses for investment commitments, or charge hidden fees if you allow them to manage your money. The people hawking the investments may not disclose their own interest in the token or the stock they’re selling you (which is illegal.) They might sell you outdated research information or charge you for dubious training courses.
It Happened to Them
Any of you who took investment advice from Kim Kardashian and bought the crypto security EMAX (which she was paid $250,000 to promote on her Instagram, but did not disclose) have been vindicated by the SEC, which made her pay $1.26 million in penalties. You might even say her decision to hawk crypto via social was a bad investment.
Reducing the Threat
Don’t take investment advice from people whose area of expertise is primarily starring in a reality show and “breaking the internet” seems obvious, but maybe less so if a “finfluencer” looks the part and could pass for an honest broker (in both senses.) In that case, you need to make sure that the person whose advice you’re taking is a registered investment advisor. Credentials actually do matter here.
Beware of easy money promises. There is no ONE SIMPLE HACK to eliminate all of your debt, or make you very wealthy with little money down.
Be aware of your own limitations in understanding what you’re buying. Consider multiple sources and evaluate claims independently via licensed financial advisors.
If a finfluencer insists that you buy something NOW NOW NOW, that is your sign to slow down and be careful. Scammers will use a sense of urgency to prevent targets from fully evaluating their claims.
