Attorney General Warns Marylanders of Sophisticated Investment Scams on Meta Platforms

Maryland Attorney General Anthony G. Brown has issued a consumer alert warning residents about the increasing prevalence of investment scams operating on Meta platforms, including Facebook, Instagram, and WhatsApp. These fraudulent schemes are leveraging deceptive advertisements and advanced “deepfake” technology to target individuals and defraud them of their savings through various tactics such as “pump and dump” schemes, confidence scams, and fraudulent cryptocurrency operations.

The Attorney General’s office is advising consumers to exercise extreme caution when encountering investment-related advertisements on social media. A common tactic used by scammers involves the “bait” stage of a pump and dump scheme, where advertisements featuring recognizable figures like Cathie Wood, Joe Kernen, or Kevin O’Leary, often used without their permission, promise exclusive access or guaranteed high returns. These ads may also target specific communities by using images of financial advisors trusted within those groups, also without consent. Once a user clicks on such an advertisement, they are frequently pressured to move the conversation to encrypted messaging platforms like WhatsApp or Telegram, which allows the scammers to operate outside the direct oversight of platform moderators. Within these private groups, victims are fed what is presented as expert advice and false testimonials, ultimately being coerced into purchasing specific stocks or cryptocurrencies. Initially, these fraudulent tips might appear to yield profits, encouraging victims to invest larger sums. However, this is a setup for the “dump” phase, where scammers sell their holdings at an inflated price, causing the value to plummet and leaving unsuspecting investors with significant losses.

Confidence scams operate similarly, beginning with advertisements that suggest lucrative opportunities through specific investment platforms or strategies, sometimes also employing celebrity endorsements. After a user clicks an ad and provides contact information, often after being directed to a website resembling a news article, scammers initiate contact. These fraudsters meticulously build a relationship of trust with their targets, offering to guide them through a seemingly legitimate but ultimately fake investment platform or app, which may be a clone of a real trading service. To reinforce the illusion of legitimacy, initial small investments might appear to generate substantial profits, and scammers may even allow a small withdrawal of these purported gains. This perceived success and the developed rapport encourage victims to invest larger amounts, sometimes even borrowing money from friends or family. The scam culminates when the victim attempts to withdraw their profits, only to be told they must pay an additional fee, such as a commission or tax. Even after paying these fees, the scammers will continue to invent excuses to withhold the money. Eventually, when the victim stops paying or investing further, the scammers vanish with the entire investment.

To combat these pervasive threats, Attorney General Brown urges investors to remain vigilant and implement several protective measures. He emphasizes that reputable financial professionals typically do not advertise their specific investment strategies on social media platforms. Consumers should be highly skeptical of advertisements that promise guaranteed returns, as no legitimate investment is entirely risk-free. High-pressure tactics, such as warnings of imminent missed opportunities, are also a significant red flag. The use of celebrity endorsements, especially in AI-generated videos or images, should raise immediate suspicion. Similarly, requests to invest in cryptocurrency through ATMs or to send digital currency to private wallets or platforms warrant significant caution. Scammers may also ask individuals to receive funds in their bank accounts and convert them to cryptocurrency, a practice that should be avoided. The tendency to shift communication from public social media sites to encrypted apps like WhatsApp or Telegram is another critical indicator of potential fraud.

Before making any investment, it is crucial to conduct independent research. Consumers should verify the credentials of any financial professional using resources like FINRA’s BrokerCheck, though they should be aware that scammers may impersonate legitimate individuals and firms. Searching online for reviews of companies or salespeople alongside terms like “scam” or “complaint” can reveal pertinent information. It is also important to scrutinize email addresses to ensure they belong to legitimate domains and to be alert for spelling errors in advertisements and communications, which can sometimes indicate an overseas origin. Consulting with a trusted legal or financial advisor before investing is highly recommended, as is taking seriously any warnings issued by current advisors. Ultimately, trusting one’s instincts and thoroughly considering any investment that seems too good to be true is paramount.

The rise of “deepfake” technology presents another challenge, with scammers using sophisticated AI to create realistic videos or livestreams that mimic real people. Consumers should be wary if a video appears slightly “off” or if the audio does not perfectly align with lip movements. Performing a reverse image search on videos of famous figures can help identify repurposed older footage used in fraudulent schemes. It is important to remember that celebrities rarely offer financial advice or advertise obscure cryptocurrency platforms online.

Protecting personal identity and online networks is also vital. Locking down social media profiles to ensure privacy of friend lists, photos, and posts can prevent scammers from gathering information about potential targets and their connections. If a friend suddenly messages about an investment opportunity, it is advisable to verify the information independently through a phone call or text message to ensure their account has not been compromised. Under no circumstances should login credentials, social security numbers, or financial details be shared with individuals met online. Furthermore, granting remote access to computers or mobile phones to unknown individuals poses a significant risk, as scammers may pose as company representatives to gain access to accounts and steal funds.

The Attorney General’s office reminds consumers that most fraudulent transactions, particularly those involving cryptocurrency, are irreversible. Keeping a paper trail and archiving all communications is essential. Finally, individuals should be extremely cautious of purported asset recovery specialists or attorneys who contact them after a loss, promising to retrieve lost funds for a fee, as these individuals may also be scammers preying on vulnerable victims.

Article by Mel Anara, based upon information from the Maryland Attorney General.

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