The US Securities and Exchange Commission’s Office of Investor Education and Advocacy (OIEA) has recently initiated a public service campaign aimed at increasing awareness about relationship investment scams. These fraudulent activities typically commence with an unsolicited message via social media or text, where the scammer progressively establishes a personal connection. After gaining the individual’s trust, they will then persuade the victim to invest in illegitimate opportunities. These malicious schemes are widely recognized as romance scams, financial grooming scams, or “pig butchering” scams.
Previously, the Commodity Futures Trading Commission (CFTC) had initiated the “Dating or Defrauding?” campaign to combat the increasing number of romance-related investment scams. These scams accounted for nearly $4 billion in losses last year alone. This initiative, spearheaded by the CFTC and other agencies, underscores the evolving tactics employed by scammers, such as counterfeit profiles and cryptocurrency schemes, frequently launched via dating apps or social media to entice victims into fraudulent investments.
The SEC has also joined the fight against such scams. As part of their new campaign, two animated videos have been released titled “Don’t Open the Door to Scammers” and “Let’s Talk About Relationship Investment Scams”. The campaign also incorporates a resource page that provides detailed information about how these scams operate, what signs to look out for, and guidance on protection against them.
The SEC’s advice includes cautioning individuals against responding to unknown messages, maintaining a skeptical attitude towards unsolicited investment offers regardless of who the sender is, ceasing all contact if a scam is suspected, and immediately reporting incidents to the SEC.
Acting Chairman of the SEC, Mark Uyeda, stressed that investor protection remains a core aspect of the SEC’s mission. He highlighted that these scams can result in billion-dollar losses annually. Lori Schock, the Director of the OIEA, cautioned that ambiguous or misdirected messages from unknown contacts often signal fraudulent activities and should be disregarded, blocked, or deleted.
In addition to the educational videos and materials, the campaign also includes an investing quiz and a new article penned by Schock titled “Relationship Investment Scams – Starts With ‘Hello,’ But Could End With Saying ‘Goodbye’ to Your Money”.
These initiatives taken by the SEC and CFTC underline the serious and increasing threat of relationship investment scams. By raising awareness and providing resources, they aim to protect investors and reduce the prevalence of these damaging fraud activities.
