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NEW YORK — Social media is full of scammers promising guaranteed returns on investment, and consumers lost billions of dollars to them last year.
Troy Gochenour, 50, of Columbus, Ohio, was conned out of $25,800, including $15,800 in borrowed money, in a crypto-mining scam that began with a WhatsApp message from a beautiful stranger.
“I had just moved home to restart my life, after trying to make it in show business in New York, and I was lonely,” Gochenour said. “So I started online dating. Then I got a WhatsApp message that began, ‘Sorry to bother you.'”
Financial scams, including cryptocurrency schemes, cost consumers $3.8 billion last year just in the U.S., according to the Federal Trade Commission, twice as much as in 2021. Such scams are also a problem globally.
In Gochenour’s case, he spent several weeks messaging with someone who seemed romantically interested in him before she brought up “liquidity mining.”
After he set up a crypto wallet, it appeared that the money he transferred there was growing just the way his scammer said it would.
“I was hooked on this person,” he said. “And at first it looked like it was working. She said, ‘We could be together, you and I, and make all this money.'”
Then one day, when he had transferred about $5,000 of his own money to the wallet, he woke up to check the balance and the money was gone. When he looked at a website his scammer had directed him to, to try to understand what had happened, he saw a “contract.” He contacted the scammer about it, and she told him to contact “customer service,” who told him to put in another $10,000 in order to get all of his money back, plus bonuses.
Gochenour continued to add money to his wallet when prompted, despite the money being transferred out each time, until it looked like he had $200,000 coming to him.
“The numbers were all fake, all manipulated,” he said.
When he was told he’d have to pay $35,000 in taxes up front to access the $200,000, Gochenour realized it was a scam. By that point, he had taken out nearly $16,000 in personal loans on top of his $55,000 in student debt, each time lured by promises of even greater rewards. He now works with the Global Anti-Scam Organization to investigate similar frauds and to help educate others.
What can you do?
Most will sound quick, easy, and low- or no-risk. Many involve real estate, cryptocurrency, financial coaching, or gold. Typically, the company uses words like “proven” and “guaranteed,” along with testimonials from people saying they’re on the other side and have benefited wildly. These are most often paid actors and invented reviews, according to Melanie McGovern, director of public relations for the International Association of Better Business Bureaus.
“Watch out for those endorsements,” McGovern said. “And know your friends. If you get a message that seems sketchy from someone’s account, especially someone you haven’t heard from in a while, reach out to them on a different platform. Because someone may be spoofing them.” Spoofing is a term for when a hacker disguises themselves as a trusted source.
First, take time to research the offer. Scammers want to rush you, so slow down. Search online for the name of the company and words like “review,” “scam,” or “complaint.” No one can guarantee a return, and anyone who promises a no-risk investment is a fraud.
Second, run the information by a friend or adviser. You may not have gotten an offer like this, but chances are you know someone who has, especially as scams often target specific communities, according to the FTC.
Third, don’t accept any unsolicited offers. If you get an out-of-the-blue call, text, or e-mail about “an amazing investment opportunity,” it’s a scam.
Finally, reject the high-pressure pitch.
“Legitimate companies let you take the time you need to investigate before spending any money,” says McGovern.
Investment coaching
In this scam, the fraudster will tell you their “patented,” “tested,” or “proven” strategy will let you make money investing in stocks, bonds, foreign currency, or tax liens. They promise the approach will set you up for life and let you stop working. But after the free events and introductory videos, you’ll have to pay fees upfront for the rest of the expensive coaching, with no guarantee of return.
“It’s all part of a marketing scheme to get you to pay thousands of dollars for what turns out to be empty promises,” the FTC warns in its consumer alert.
Real estate coaching
In-person and online seminars about how to invest in real estate often promote “risk-free” training, luring targets with promises of financial freedom. If the promotional materials and sales pitches make over-the-top claims, be wary. Watch for phrases like “sure thing,” “security for years to come,” or the chance to “rake in money by working part-time or at home.” Most people never make back the thousands of dollars of upfront fees.
Precious metals and coins
If “metal dealers” or “rare coins merchants” tell you there’s no better time than now to invest, watch out. Scammers in this con typically simply keep your money. The FTC advises consumers to read the Commodity Futures Trading Commission’s precious metals fraud alert before investing in bullion, bullion coins, collectible coins, or gold.
The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab. The Associated Press is solely responsible for its journalism.
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