Go big, or go home. That is clearly the thinking of bad actors who have created thousands of fraudulent investment sites throughout Europe — and whose actions could bode a view of things to come in the U.S.
Researchers recently discovered a network of more than 11,000 fake investment sites, aimed at luring in fraud victims throughout Europe. Perhaps not surprisingly, these sites often appeared more sophisticated and realistic than many previous fake sites, including “fabricated evidence of enrichment and falsified celebrity endorsements to create an image of legitimacy and lure in a larger number of victims,” according to Bleeping Computer’s report.
These fraudulent financial sites have targeted investment customers in the United Kingdom, Belgium, Germany, the Netherlands, Portugal, Poland, Norway, Sweden and the Czech Republic. However, U.S. customers may be next, according to experts.
Through these sites, European investment customers have been tricked into sinking their money in purportedly “high-return investments,” for which they were often required to deposit a minimum of $255 (or €250). Despite efforts to contain or demolish these false financial pretenders, more than 5,000 of these fake investment sites were still active as of late July, according to Group-IB. The research firm uncovered and mapped a huge thriving network of related phishing sites and content hosts.
Investment fraudsters have also effectively promoted their fake sites through social media platforms, like Facebook and YouTube, where they can reel in more potential victims and build their credibility. Another trick: These sites cross delivery channels, often using mobile texts and voice calls from supposed “customer agents” to make these financial offerings seem more legitimate.
Going another step further, after depositing their initial investment, these fake investment sites send along a “dashboard” that purportedly allows users to track their accounts, thereby “prolong[ing the] illusion of a legitimate investment and entice victims to deposit more money for larger profits,” Group-IB said. When investing victims try to pull out their money from these fake accounts, the fraud is ultimately revealed.
Can U.S. investment firms prevent this kind of impersonation and trickery?
Jim Ducharme, executive at Outseer, the Massachusetts-based payment verification company that spun out of RSA Security last summer, pointed out that, “Banks are required by law to keep detailed records of work-related employee interactions to ensure that there is no fraudulent activity taking place.
“Record keeping has always played a significant role in holding Wall Street accountable,” Ducharme added. “By relying on external communication methods to discuss confidential trades and deals, bankers and traders compromise overall market security and investor protection.”
“This investigation marks a strong start in the crackdown on clandestine messaging on Wall Street,” he added. “I believe this could be the tip of the iceberg when it comes to uncovering fraudulent activity.”
In a recent email to its customer, financial services company Charles Schwab warned: “Stay alert for investment scams involving cryptocurrency. At Schwab, we’re committed to helping you protect your assets. One way we do that is by raising awareness of the increase in fraudulent investment schemes (“scams”) involving cryptocurrencies and digital assets.
“While investing involves taking some risks, being scammed shouldn’t be one of them,” the email added.
5 red flags for investment scams
- “Guaranteed” high investment returns, supposedly with little or no risk, and sounding too good to be true.
- Unlicensed or unregistered sellers. Use Investor.gov to check out the background of anyone offering you an investment in securities.
- Skyrocketing account values. Investments that appear to rapidly increase in value are often fake.
- Fake testimonials. Scammers often pay people to provide fake reviews, so never rely solely on testimonials in making an investment decision.
- Fake contacts. Take caution if someone approaches you through social media with an investment opportunity. Pretending to be a friend or to have a mutual acquaintance is a common tactic used to gain trust.