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.)
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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