Americans lost the most money to investment scams compared to other types of scams last year. They lost a total of $3.8 billion, according to the Federal Trade Commission. A recent study from a law firm in Miami called Carson Law, which focuses on investment fraud, explained how serious the problem is in each state.
To help raise awareness and combat this issue, Carlson Law, an investment fraud law firm released their first annual study, The 2023 State of Investment Fraud, after analyzing the most recent data from the following annual fraud reports:
In formulating their report, Carlson analysed three metrics: the total number of victims and monetary losses, highest average losses per victim, and highest rates of investment fraud.
Investment fraud was the costliest type of fraud in the US in 2022, with a record $3.82 billion stolen, up from $1.6 billion the previous year, as stated in the report.
“Investment fraud is currently the costliest type of fraud in America and the schemes are becoming increasingly complex as criminals fuse traditional tactics with online scams involving cryptocurrencies and artificial intelligence,” reads the report.
“While all age groups are affected, people aged 30 to 49 are the main targets when it comes to investment fraud, according to the FBI.
“The unprecedented rise in investment fraud is due to a combination of traditional and modern tactics, with the bulk of the increase coming from cryptocurrency-related scams,” according to the report. “In 2022, a record $2.57 billion was lost to crypto-investment scams. Traditional scams, including Ponzi schemes, pyramid scams, and real estate fraud, were also prevalent.”
As for cryptocurrency scams, the report warns of initial coin offerings. ICOs are fundraising mechanisms for crypto startups. Scammers may create fake ICOs, websites and social media promotions to get people to invest.
Ernst & Young published a study based on legal proceedings from 2004 to 2018, which found that professional athletes—including the NFL, NBA, MLB and NHL—lost $585 million to investment scams.
A lawyer for Usain Bolt, one of the world’s greatest sprinters, said in January that more than $12.7 million had gone missing from his account with Stocks and Securities Limited (SSL), a private investment company in Jamaica.
Bolt had $12.8 million in the account, which was part of his retirement savings, but it now reflects a balance of only $12,000, the lawyer said.
There are also some new scams people should be aware of in 2023. Scammers are also leaning into the prevalence of artificial intelligence and creating deep fake videos and voice clones, according to the report.
It pointed to one incident involving a woman searching online for investment opportunities. That woman lost $750,000 when fraudsters used a voice clone of Elon Musk, which directed her to a website where she thought she could buy shares of his company’s stock. Her money was stolen.
“Signs it may be a fraud or scam include guaranteed returns, aggressive sales tactics, if the person offering the investment is not licensed, will not provide the information in writing or agree to meet in person,” the report warned.
According to the report, the best way to avoid investment fraud is to never send money or give personal information to any entity or individual unless you have thoroughly researched their background, met them in person, and consulted with a third-party expert.
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