Online Investment Scams: Social Engineering Credibility

  • 5 min read

Investment scams are one of the most common types of online scams our clients and readers encounter. A major factor of why these scams are so successful for the scammer is because they’re using social engineering tactics to misrepresent their credibility. When approached by these types of scammers, it may be challenging to truly vet their credibility. In this article, we’ll outline how scammers can misrepresent their credibility and the red flags of these scams in real-time.

The scam goes something like this…

Out of the blue, you’re contacted by someone who claims to have previously worked with your colleagues, went to your college, or somehow claims to be associated with the people you are or were previously associated with (Red Flag #1)

They’ve likely gathered this information from your LinkedIn, Facebook, or another social media profile. They may have done research on your and the people they claim to be associated with in order to create their false identity. 

At some point, this person will bring up the fact that there is an investment opportunity, and the fact that they’ve already built up their “credibility” may give you a false sense of security. Initially, they won’t ask you to invest in the company or cryptocurrency, but they’ll flaunt their “earnings” on social media. They may post about making $20K on an easy investment, or they may post photos of luxurious products or places crediting the money they made on some investment (Red Flag #2)

What they’re trying to do is they’re trying to capture your interest. They’re setting the bait for you to ask about the investment and ask how you can also become an investor. They may play hard to get at first, but really they’re trying to reel you in like a fish. Also, there’s no such thing as an “easy investment”, and anyone who claims to be able to make you quick money easily through investment is attempting to scam you.

Once they’ve captured your interest and established their “credibility”, they’ll start pushing you to invest. It’s often an investment in cryptocurrency, but it can also be for companies, real estate, or other tangible or intangible assets. They’ll ask for a small amount of money, usually under $5K, but once it’s received, they’ll send you back an account statement that shows the investment is already growing (Red Flag #3)

The account statement is false but is designed to trick you into thinking that you’ve made a great choice to invest with this person or company. Over time, the scammer will continue to show you account statements that portray your account to be growing at an exponential rate.

Now that you’ve been investing for some time, and believe it to be true, you’ll probably ask to withdraw some or all of your funds. Suddenly now there are roadblocks between you and your account funds. The scammer may say you have to pay a fee to withdraw, pay taxes first, or pay a broker fee, whatever it may be, they want more money before you are permitted to withdraw. (Red Flag #4).

It’s about at this point when most people begin to realize they’ve been scammed. As an investor, you should be able to withdraw your money at any time because it’s your choice to invest. A company that is legitimately taking funds from investors will provide transparency in the process and allow a method for investors to pull out if desired. Scammers will attempt to get as much money out of you as possible and may even get hostile when discussing your withdrawal. They react this way because there is no money for you to withdraw. All of the statements have been faked and the money you’re sending is simply going to the scammer. 

How to spot fake credibility

It may be challenging to spot false credibility in the beginning, especially if they don’t ask for money right away. Once they do ask for money, it’s important to ask yourself a few questions:

  1. Who did they mention they knew?
  2. What is your relation to this person they claim to know? Does this reference align with behavior you’d expect from this person you know?
  3. Would this person refer someone to you regarding an investment?
  4. How much does this person contacting you know about the people they claim to also know? Is this surface information that can be found online, or does it imply a deeper relationship? 
  5. Similarly, how much information does this random person know about you that is only surface-level information found online?

Investments scams including fake credibility are very common types of scams that we’ve seen over the years and more so in recent years. Any time you choose to send money to someone for an investment, make sure you know exactly where that money is being held. Verify that the investment is legitimate and that the company isn’t simply photoshopping fake account statements. Another way to test the legitimacy is to ask to send a small amount first, then ask to withdraw it and observe their reactions. If you get any kind of pushback, you know it’s a scam.

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