Financial Fraud Types
Learn how each type of fraud operates, what schemes to watch for, and how to protect yourself.
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Coins & Precious Metals
Common Schemes
- ✗ Counterfeit coins sold as genuine
- ✗ Artificially inflated grading (MS-70 vs MS-65)
- ✗ Fake gold/silver bullion bars
- ✗ Overpriced 'collectible' coins with no numismatic value
- ✗ Bait-and-switch on coin orders
How to Protect Yourself
- ✓ Buy only from dealers registered with the American Numismatic Association (ANA)
- ✓ Get independent grading from PCGS or NGC
- ✓ Compare prices on APMEX or Kitco before buying
- ✓ Never buy coins sight-unseen from cold callers
📈
Penny Stocks
Common Schemes
- ✗ Pump-and-dump via email newsletters and social media
- ✗ Boiler room cold calls with guaranteed returns
- ✗ Shell companies with no real business
- ✗ Paid promoters posing as independent analysts
- ✗ Reverse merger fraud
How to Protect Yourself
- ✓ Check the company on SEC EDGAR before investing
- ✓ Verify the broker on FINRA BrokerCheck
- ✓ Never buy a stock recommended by an unsolicited email
- ✓ Beware of any stock trading under $5 with massive volume spikes
🛢️
Oil & Gas
Common Schemes
- ✗ Fake 'working interest' deals in non-existent wells
- ✗ Inflated reserve estimates
- ✗ Fraudulent royalty programs
- ✗ Ponzi-structured distributions from new investor money
- ✗ Unregistered securities sold as 'partnerships'
How to Protect Yourself
- ✓ Verify all well locations with state oil & gas regulators
- ✓ Require independent reserve audits
- ✓ Check the offering with your state securities regulator
- ✓ Demand full financial statements before any investment
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Private Placements
Common Schemes
- ✗ Unregistered securities sold to non-accredited investors
- ✗ Inflated company valuations with no basis
- ✗ Promissory note fraud
- ✗ Fake Regulation D filings
- ✗ Missing or falsified PPMs (Private Placement Memorandums)
How to Protect Yourself
- ✓ Confirm the Reg D filing on SEC EDGAR
- ✓ Only invest if you are a verified accredited investor
- ✓ Have an independent attorney review the PPM
- ✓ Never invest based solely on a broker's word
⚡
Commodities
Common Schemes
- ✗ Fraudulent futures contracts on fake exchanges
- ✗ Fake warehouse receipts for non-existent grain/metals
- ✗ Spot commodity fraud (forex, metals)
- ✗ Pooled commodity funds with no real trading
- ✗ Advance-fee commodity scams
How to Protect Yourself
- ✓ Only use CFTC-registered commodity trading advisors
- ✓ Verify the firm on the CFTC's registration database
- ✓ Never wire money to an overseas commodity firm
- ✓ Understand that spot commodity trading is largely unregulated
₿
Crypto & Digital Assets
Common Schemes
- ✗ Rug pulls — developers abandon project after fundraising
- ✗ Fake exchanges that steal deposits
- ✗ Ponzi schemes disguised as DeFi yields
- ✗ Unregistered ICOs/token sales
- ✗ Romance scams ('pig butchering') leading to crypto fraud
How to Protect Yourself
- ✓ Only use established exchanges (Coinbase, Kraken)
- ✓ Verify smart contract audits before DeFi investment
- ✓ Check SEC's list of crypto enforcement actions
- ✓ If a stranger online introduces you to an investment — it's a scam
🏠
Real Estate Investments
Common Schemes
- ✗ Syndication fraud with fake properties
- ✗ Inflated appraisals and fake rental income
- ✗ Deed theft targeting seniors
- ✗ Fake REITs sold outside of regulated exchanges
- ✗ Foreclosure rescue scams
How to Protect Yourself
- ✓ Physically visit any investment property
- ✓ Verify ownership through county recorder records
- ✓ Check the syndicator's track record and SEC filings
- ✓ Use a licensed real estate attorney for all transactions
🎯
Investment Gurus & Advisors
Common Schemes
- ✗ Unlicensed investment advice sold via seminars
- ✗ Fake performance records
- ✗ Affinity fraud targeting churches, communities, or veterans
- ✗ Churning — excessive trades to generate commissions
- ✗ Hidden fee structures
How to Protect Yourself
- ✓ Verify your advisor on SEC's Investment Adviser Public Disclosure (IAPD)
- ✓ Check FINRA BrokerCheck for complaints and disciplinary history
- ✓ Never give full discretion over your account to someone you just met
- ✓ Get a second opinion on any advisor's recommended strategy
📱
Social Media & Direct-Message Scams
Common Schemes
- ✗ “You won!” lottery, prize, or sweepstakes messages for a contest you never entered — pay a 'fee' or 'tax' to claim
- ✗ Impersonation of friends, celebrities, or brands offering fake giveaways, grants, or 'flips'
- ✗ Romance scams that pivot into 'investment' tips (a.k.a. 'pig butchering')
- ✗ “Investment mentors” and crypto 'signal groups' recruiting via DM on Instagram, X, Telegram & WhatsApp
- ✗ Hijacked accounts of people you know suddenly asking for money or pushing a 'platform'
- ✗ Fake 'account verification' or 'you've been hacked' DMs designed to steal your login
How to Protect Yourself
- ✓ No real lottery asks you to pay a fee or tax up front — and you can't win a contest you never entered
- ✓ Never click 'claim' links in unsolicited DMs; go to the official website directly instead
- ✓ If a friend sends an urgent money request, call them on a known number to confirm it's really them
- ✓ Anyone who meets you on social media and steers you toward an investment app or 'platform' is running a scam
- ✓ Turn on two-factor authentication on every social account, and never share verification codes
- ✓ Report and block the account, and report impersonation to the platform (Meta, X, Snap, etc.)
🧾
IRS & Tax Scams
Common Schemes
- ✗ Threatening calls claiming you owe back taxes and will be arrested, deported, or lose your license unless you pay now
- ✗ Demands for payment by gift card, wire transfer, cryptocurrency, or prepaid debit card — methods the real IRS never uses
- ✗ Phishing emails and 'smishing' texts with fake IRS logos linking to sites that steal your SSN, refund, or bank login
- ✗ Fake 'tax refund,' 'stimulus,' or 'economic impact payment' notices asking you to 'verify' personal and banking details
- ✗ Ghost tax preparers who inflate refunds, skim a cut, and refuse to sign the return they filed
- ✗ Identity thieves filing a fraudulent return in your name to steal your refund
- ✗ Caller-ID spoofing that makes a scam call look like it's coming from the IRS or a government office
How to Protect Yourself
- ✓ The IRS almost always makes first contact by U.S. mail — it will never call, email, or text out of the blue demanding immediate payment
- ✓ The IRS never asks for payment in gift cards, wire transfers, crypto, or prepaid cards, and never takes card numbers over the phone
- ✓ The IRS cannot have you arrested, deported, or your license revoked over a phone call — those threats are always a scam
- ✓ Never click links in unexpected 'IRS' emails or texts; type IRS.gov yourself and sign in to your own account
- ✓ Verify any preparer's PTIN (Preparer Tax ID Number) and never sign a blank or incomplete return
- ✓ When in doubt, hang up and call the IRS directly at 1-800-829-1040; report scam calls to TIGTA at tigta.gov and to the FTC
- ✓ File early and request an IRS Identity Protection PIN (IP PIN) to block fraudulent returns filed in your name
🏛️
Government & Law-Enforcement Impersonation (FBI, Social Security & More)
Common Schemes
- ✗ “FBI,” “DEA,” or “U.S. Marshals” callers claiming your identity or bank account is tied to a crime (drug money, money laundering) and you must “cooperate” to clear your name
- ✗ Being told there is a warrant for your arrest and you must pay a “fine” or “bond” immediately to avoid being taken to jail
- ✗ “Move your money to a safe or federal account,” or convert it to gift cards, wire, or crypto, to “protect” it during a fake investigation — it goes straight to the scammer
- ✗ Social Security Administration impostors saying your SSN was “suspended” or linked to fraud and must be “verified”
- ✗ Medicare, court “missed jury duty,” immigration/USCIS, sheriff’s-office, or “government grant” impersonators demanding payment or personal information
- ✗ Caller-ID spoofing that makes the call display a real agency or local police number, plus fake badge numbers, case numbers, and “agents” who keep you on the line
- ✗ Threats of arrest, deportation, or loss of your license or benefits unless you act “right now” — and pressure to keep it secret from family or your bank
How to Protect Yourself
- ✓ No real government agency or law-enforcement officer will call to demand payment or threaten immediate arrest over the phone — that is always a scam
- ✓ The government never takes payment in gift cards, wire transfers, or cryptocurrency, and never tells you to “move money to protect it”
- ✓ The FBI, DEA, and U.S. Marshals do not call people to collect money, resolve warrants, or “clear your name” by phone
- ✓ Your Social Security number cannot be “suspended,” and the SSA will not call to threaten you
- ✓ Hang up. Don’t press buttons, don’t “stay on the line,” and don’t call back the number they gave you — look up the agency’s real number yourself
- ✓ Never share your SSN, bank, or account details, and never let anyone pressure you into secrecy — real agencies want you to verify
- ✓ When in doubt, hang up and talk to someone you trust first; report it to the FBI at ic3.gov and the FTC at reportfraud.ftc.gov
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Recovery & “Asset Recovery” Scams (The Second Wave)
Common Schemes
- ✗ Upfront-fee firms promising to recover money you already lost — for a retainer or percentage
- ✗ Cold callers who already know you were scammed (victim 'sucker lists' are sold among fraudsters)
- ✗ “Asset recovery advisors” who charge fees but rarely recover anything
- ✗ Attorneys 'guaranteeing' a settlement or outcome to collect fees and retainers
- ✗ Fake government, court, or law-firm agents demanding a fee to 'release' your recovered funds
How to Protect Yourself
- ✓ Legitimate recovery never requires a large upfront fee — treat any such demand as a red flag
- ✓ No ethical attorney can guarantee a settlement or a specific outcome — it's against bar rules
- ✓ Reporting to the SEC, CFTC, and FTC is always FREE — you never pay to recover through regulators
- ✓ Verify any attorney with your state bar association; verify advisors on FINRA BrokerCheck
- ✓ If you've already been scammed once, assume anyone who contacts you offering to 'help' is a second scam
How to tell legitimate help apart: Not all paid help is a scam — but the difference is sharp. Legitimate help quotes a flat fee for concrete, defined work (assembling your documents, organizing evidence, preparing a case file for an attorney), never takes a percentage of what's recovered, never guarantees recovery, and never contacts you first. If someone calls you out of the blue, promises to get your money back, or wants a cut of it — walk away.