Investment fraud a serious money maker for criminals

Europols’s spotlight report ‘Online fraud schemes: a web of deceit’, looks into online fraud schemes—a major crime threat in the EU and beyond—and one of the report’s primary themes is investment fraud.

But first I want to share some more remarkable conclusions from the report:

• Charity scams that prey on concern about international conflicts and natural disasters are becoming more prevalent.
• Fraudsters are evolving their techniques and increasingly re-target fraud victims.
• The social engineering techniques used by fraudsters are growing in complexity.
• Logical attacks on ATMs still occur in the EU, with criminal networks testing ways to exploit new vulnerabilities.
• It also notes the increasing use of “shimming” attacks where an attacker intercepts communication between a card and card reader’s chip interface, and then relays it to another device.

Investment fraud and business e-mail compromise (BEC) fraud remain the most prolific online fraud schemes. Criminal networks involved in these schemes pose a high threat, given their level of organization and resilience. This conclusion matches that of the 2022 Internet Crime Report produced by the FBI’s Internet Crime Complaint Center (IC3), which attributed almost $84 million dollars to BEC and over $75 million to investment fraud.

Europol found that criminal networks involved on investment fraud show great levels of adaptability by constantly refining and improving their methods and leveraging new investment products that are in high demand.

Preying on one of the most basic human flaws, investment scams and other get-rich-quick schemes are making up an ever larger portion of the online scammers’ cake. And the scammers are very much aware that a large amount of money can be made, and they are more than willing to invest in the tools that make their fraud look more trustworthy.

Investment fraudsters look for victims on social media platforms. But they also use e-mail, advertisements on websites, and instant messaging to trigger a potential victim’s interest. When a victim starts to ask questions, the criminals come up with reasons why funds can’t be withdrawn, such as fees or state taxes. To top things off, they will tell the victim they need more money in order to release their funds.

Criminal networks involved in investment fraud make extensive use of call centers. These call centers operate in different languages and the operators are not necessarily aware of the criminal activities behind the work they do.

One of the preferred tactics of investment fraud is the pyramid scheme, where victims are encouraged to recruit more participants. But another method resembles that of romance scams where the criminal builds a relationship with the victim.

Popular investment opportunities offered by the criminals include stocks, cryptocurrencies, and pension funds. The most reported investment fraud products in the EU are cryptocurrencies. The IC3 report mentions for example:

“Cryptocurrency support impersonators: Increasingly, crypto owners are falling victim to scammers impersonating support or security from cryptocurrency exchanges. Owners are alerted of an issue with their crypto wallet and are convinced to either give access to their crypto wallet or transfer the contents of their wallet to another wallet to “safeguard” the contents.”

To re-target victims the criminals pose as lawyers or members of law enforcement claiming they can help victims to get the lost money back.

Recognizing investment scams

We are by no means financial experts, but we have seen too many good people lose money on Ponzi schemes, rug-pulls, and fake Initial Coin Offerings (ICOs), so we feel it is our job to keep you safe, and warn against these types of online investment frauds.

We realize that it is hard to tell investment scams apart from some of the more legitimate offers that are thrown at us in commercials every day. But we do want to hand you a few easy-to-follow rules to keep your money in your own hands:

• Treat calls, texts, mails, and other advice out of the blue with extreme caution.
• Don’t judge a book by its cover. Investment scams can often afford to look good.
• Make sure to read the fine print. Understand what you are getting into.
• If it sounds too good to be true, it usually isn’t true.
• Very high returns usually come with extremely high risks. Your money may sometimes even be better off in a casino.
• When you are urged to act now, remember that while some legitimate opportunities want you to hurry, scammers always want you to hurry.
• Don’t get turned into a money mule or money launderer.

Still not convinced? I have this piece of land on Venus, that I would be willing to part with for the right price. But you will need to act fast.

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