It’s an alluring offer: You hear from someone who claims to be able to help you recover money you lost from a previous investment or other fraud. The information sounds credible, and at first glance the organization appears legitimate. The money that’s promised isn’t only welcome but seems well-deserved compensation for previous losses.
The catch? They want you to pay money up front for the recovery “services,” which are almost always fraudulent themselves. In addition to the amount you lost originally, you’re now at risk of losing more money at the hands of professional criminals.
These scams are a form of advance fee fraud—when someone charges a fee up front for a service or product they have no intention of delivering. Recovery offers can be tempting, especially if you’ve already lost a large sum of money and are anxious to reclaim any amount you can. But engaging with these scams will only further your losses.
Read on for tips for how to spot and avoid fraudulent recovery offers.
Spotting a Scam
While recovery scams can take many forms, they usually rely on a similar series of tactics.
Fraudsters often find their targets by purchasing or trading lists of people who‘ve been impacted by fraud. In some cases, they might even be associated with those who committed the initial fraud, returning to a previous victim in an attempt to steal even more funds.
Targets might receive urgent correspondence and high-pressure calls or messages from official-sounding organizations. These individuals might falsely claim to be working closely with the U.S. government, regulatory agencies, law firms or consumer advocacy groups.
Fraudsters might also impersonate registered securities professionals and brokerage firms. In some instances, they go so far as to falsely use the name of a real person or firm registered with FINRA—and some will even encourage you to research their names on FINRA BrokerCheck in an attempt to bolster credibility and build trust.
In other cases, scammers establish fraudulent websites alleging to be “asset recovery specialists” or a similar credential. They’ll then issue false press releases or engage in deceptive advertising through social media, boasting of their success in returning customers’ lost funds.
Once contact is made and you express interest, the scammer assures you that your money is waiting and can be recovered for a fee. The fees then keep coming, but the promised money never does.
How to Protect Yourself
If you’re contacted by someone claiming they can help you recover lost funds, use these tips to avoid suffering additional losses:
- 1. Keep your guard up. Be extremely skeptical of any unsolicited offer to recover funds on your behalf, even if they claim to be from a regulatory organization, law firm or brokerage firm. This is a common tactic of fraudsters designed to build credibility. It’s often a first step in a series of tactics designed to culminate in the payment of money to the scammers. Anyone who charges you up front for asset recovery, guarantees your money can be returned, or discourages you from filing a complaint with law enforcement about the loss is almost certainly a scammer.
- 2. Know the tricks fraudsters use. Be aware of the influence and persuasion techniques scammers tend to use. Carefully evaluate any communications you receive, looking for red flags like misspellings or information that appears to be copied and pasted together, and be wary of requests to communicate through personal email addresses, text message, or encrypted platforms like WhatsApp or WeChat. Fraudsters often play on your emotions, so don’t let distress over your previous losses or eagerness to have your money returned cloud your judgment.
- 3. Do some searching. Before you contact any organization whose services you see advertised, do an internet search of the organization or individuals, as well as the type of offer being pitched. Consider adding the term “fraud” or “scam” in your search. You might identify red flags or find that consumer protection, regulatory or law enforcement organizations have identified your situation as a potential fraud.
- 4. Don’t send money or personal information. Fraudsters often push to have funds sent by wire transfer or, increasingly, cryptocurrency. When you send money using these methods, it can go anywhere in the world, and you typically can’t get it back. Treat these requests with extreme caution. Fraudsters might also ask for your bank account details to allegedly deposit funds or request other sensitive information they say is needed to complete payment. Don’t provide any personal information until you verify who you’re working with.
- 5. Know where to report fraud. If you suspect fraud related to an investment loss, you can file a complaint using FINRA’s online Investor Complaint Center. You can also file a complaint with the SEC or your state securities regulator and report suspected recovery scams to the Federal Trade Commission or the FBI’s Internet Crime Complaint Center. Filing a complaint is something you can do on your own. Think twice if someone offers to help you file an investor complaint with any securities regulator for a fee.
- 6. Learn about legitimate avenues for recovery of investment losses. All investments carry some degree of risk, including risk of loss, even all of their value, if market conditions sour. But if you believe you’ve been treated unfairly, FINRA, other regulators and the courts have legitimate mechanisms to help you recover assets or receive compensation.