HARRISBURG — Attorney General Dave Sunday is warning Pennsylvanians about the prevalence of fraudulent investment schemes on Meta platforms — including Facebook, Instagram, and WhatsApp. The warning is part of a coalition of attorneys general’s efforts to prompt accountability from Meta over their platforms, specifically, a more robust review of advertising in response to the rapid spread of fake investment ads involving “pump-and-dump” schemes.
Scammers are increasingly using deceptive advertisements and “deepfake” technology to lure potential investors into high-stakes scams. These scams include “pump and dump” scams, confidence scams, and fraudulent cryptocurrency schemes that aim to extract as much money as possible from victims.
Attorney General Sunday is providing tips for Pennsylvanians to protect themselves from scams, and urging everyone to carefully scrutinize social media investment advertisements before investing. Most reputable broker-dealers and investment advisors do not post specific investment advice on social media platforms.
Attorney General Sunday encourages anyone who may have been a victim of these types of scams to report it to our Bureau of Consumer Protection at 800-441-2555 or sc***@*************al.gov.
“We continue to see lures and traps online — fueled by A.I. — that dupe people into emptying their bank accounts in favor of fake investment opportunities,” Attorney General Sunday said. “Be aware that these scams often involve depicted celebrities and misrepresentations attached to famous companies. To be clear, ‘pump-and-dump’ scams are outright illegal investment fraud. We continue to push Meta to take responsibility for predatory advertising on their platforms.”
How Pump and Dump Social Media Scams Work
In a pump and dump scheme, victims are lured into investment groups and convinced to invest in cryptocurrencies or low-priced stocks. The scammers advertise, hype, and recommend buying the stocks or cryptocurrencies, increasing their prices, and then sell when the price is high, while the victims lose their money. Pump and dump schemes typically follow a three-step process:
- The Bait: Scam ads appear on Facebook or Instagram featuring recognizable figures, like Cathie Wood (Ark Invest), Joe Kernen (CNBC), or Kevin O’Leary (CNBC), without their permission. The ads often promise exclusive “insider” memberships or “guaranteed” high-return investment tips.
- The Shift: Once a user clicks the ad, they are pressured to move the conversation to WhatsApp or other encrypted platforms such as Telegram. This allows scammers to operate away from platform moderators.
- The Hook: Victims are funneled into group chats where they receive so-called “expert” advice and false testimonials. Eventually, victims are coerced into buying stocks or crypto, with the initial fraudulent tips sometimes appearing successful and generating a profit. Victims are convinced to invest large amounts in a stock or cryptocurrency, which then goes up in price and which the scammers sell off at this inflated price, leaving the victims to lose their money once the price plummets.
An example of an ad for a potential pump and dump scheme featuring a photo of Kevin O’Leary used without his permission
How Confidence Scams Work
In confidence scams, fraudsters develop trusting relationships with their victims and convince them to “invest” using fake investment platforms that drain the victims’ money. These scams can also follow a three-step process:
- The Bait: Scammers post ads suggesting that investors can make money using an investment platform or strategy. These ads may also feature well-known figures or institutions. Once the user clicks on an ad, they may be asked to enter their contact information. Other times, they will be taken to a different website that further describes the investment strategy or platform – often resembling a news article – where they are then asked to enter their contact information.
- The Investment: After the user provides their account information, they will be contacted by scammers who develop a relationship of trust and confidence with the victim. The scammers may offer to “teach” the user how to trade on a fake investing platform or even connect the victim with their own personal advisor who will speak with the user on a daily basis.
- The Scam: Once the victims seek to withdraw their profits, they are told they need to pay some kind of fee, such as a commission or tax, to do so. Even if the victims pay, the scammers will find other excuses not to return the money. Once the victim stops paying these fees or making more investments, the scammers will disappear along with the victim’s investment.
An example of a potential confidence scam ad. Translation: “SEIZE YOUR OPPORTUNITY, Gain KNOWLEDGE and PROFIT with ChatGPT bot. LEARN MORE”
Protect Yourself from Social Media Investment Scams
Attorney General Sunday recommends Pennsylvanians stay vigilant to avoid falling victim to predatory investment schemes on social media and take the following steps to protect themselves:
- Identify “Red Flags”
When browsing social media sites like Facebook and Instagram and interacting with supposed investment professionals online, be highly skeptical if you see:
- Promises of guaranteed returns: No legitimate investment is “risk-free” or offers a guaranteed return.
- High-pressure tactics: Warnings that you will “miss out” or demands to invest immediately.
- Celebrity endorsements: Scammers often use AI-generated images or videos of famous entrepreneurs to lure victims.
- Cryptocurrency demands: Requests to use crypto ATMs or to send crypto to private wallets or platforms should be regarded with suspicion.
- Requests to accept other people’s money: Scammers will sometimes ask victims to accept other people’s funds in their bank accounts and convert them to cryptocurrency.
- Platform hopping: Requests to move the conversation from Facebook to encrypted apps like WhatsApp or Telegram.
- Verify Before You Invest
Never take an ad or salesperson’s word at face value. Remember that a salesperson’s job is to be persuasive and paint a rosy picture. Conduct your own independent research:
- Verify credentials: Use FINRA’s BrokerCheck to confirm if a professional is registered. But be wary, scams may often impersonate people, firms, and their credentials.
- Search for reviews: Search the name of the company or salesperson alongside words like “scam” or “complaint.”
- Check email addresses: Verify that you are communicating with a real email associated with a real advisor’s company. Remember that scammers may register email addresses that are slightly different or may change one letter from a legitimate domain.
- Consult with a trusted advisor: Before investing, consult a trusted legal professional or licensed financial advisor who can advise you if the investment is proper.
- Beware of “Deepfakes” and AI
Scam ads now use sophisticated technology to mimic real people in videos or livestreams.
- Spot the fake: If a video seems slightly “off” or the audio doesn’t perfectly match the lip movements, it may be a deepfake.
- Reverse search: If you see a video of a famous figure, search for the original footage online. Fraudsters often repurpose old interviews.
- Beware of financial advice: Famous figures do not usually provide financial advice online or advertise investments in obscure cryptocurrency trading platforms.
- Protect Your Identity and Network
Your Facebook, Instagram, and WhatsApp profiles are gold mines for scammers looking to build a relationship with you.
- Lock down your profile: Change your settings to keep your friends list, photos, and posts private. This prevents scammers from seeing who you know.
- Verify friends: If a friend suddenly messages you about a “great investment opportunity,” contact them outside of Facebook via phone call or text to ensure their account hasn’t been hacked.
- Never share credentials: Do not provide login info, social security numbers, or financial details to anyone you met online.
- Do not provide strangers access to your devices: Do not allow anyone you do not know well to access your computer or mobile phone remotely to help you with your existing investment account or open a new account.
# # #