Learn more at consumerfinance.gov 1 of 2

How to spot frauds and scams

You’ve heard the saying “If it sounds 

too good to be true, it probably is.” 

Common scams change, but you 

can protect yourself by learning 

how to spot the red flags that can 

signal a scam.

Promises of guaranteed riches

Scammers dangle the prospect of wealth to 

convince you to put your money into their deals. 

When the seller focuses only on how much money 

you can make, beware.

What you’ll hear 

“You never have to work again.” “No risk.”

“You’re guaranteed to make money.”

The truth 

All real investments carry risk. Ask questions about 

where the profits come from, and what the risks are. 

Pressure to act right now

Be cautious when you hear a sales pitch urging 

you to act immediately before an opportunity 

disappears.

What you’ll hear 

“This is your chance to get in on the ground floor.” 

“If you don’t take this, someone else will.”

The truth 

The fraudster may be trying to keep you from 

thinking carefully, researching, and talking to your 

family or a trusted adviser.

Special opportunity just for you

Be careful when someone claims to have inside 

information that’s not available to others. Keeping 

information secret is a sign there’s something the 

scammer doesn’t want others to see.

What you’ll hear 

“This product is top secret.” “I have inside 

information that no one else knows.”

The truth 

A legitimate adviser gives you written disclosures, 

answers your questions, explains risks, and 

Consumer Financial

Protection Bureau
Learn more at consumerfinance.gov 2 of 2

discourages you from buying anything you

don’t understand.

You’ve won!

Scammers say you’ve won the lottery or another

big prize, but to collect, you have to pay an

up-front fee or tax. Or, you’ll be invited to a “free

lunch” seminar that’s marketed as educational, 

when in fact it’s a staged sales event.

What you’ll hear 

“Congratulations, you’ve won the lottery!” 

“Come to a free dinner.”

The truth 

You can’t win a lottery you didn’t enter, and you 

never have to pay to collect a real prize. Some 

companies offer “free lunch” seminars because 

they hope giving you something small will make 

you feel obligated to buy from them.

I’m just like you

Promoters sometimes target a particular faith 

community, social group, or ethnic group and work 

hard to be accepted, so you’re more likely to trust 

them. They’ll ask you personal questions, then use 

your answers to figure out what sales pitch will most 

appeal to you.

What you’ll hear 

“Everyone is making money on this deal.”

“Our church friends have all agreed.”

The truth 

Hucksters know you’re less likely to ask questions 

if you trust them, so they use association with 

your friends, faith community, or social group as a 

shortcut to earn your trust.

I’m specially trained

To earn your trust, salespeople tell you they have 

special certifications, qualifications, or credentials. 

They want you to think they’re experts who know 

what’s best for you.

What you’ll hear 

“I’m an expert adviser.” “I’ve been managing these 

kinds of investments for two decades.” 

“I’m a certified specialist.”

The truth 

Credentials alone don’t guarantee expertise or the 

quality of someone’s training. It’s up to you to find 

out if a qualification is valuable.

Contact us

 Online

 consumerfinance.gov/askcfpb

 By phone

 (855) 411-CFPB (2372)

 (855) 729-CFPB (2372) TTY/TDD

 By mail

 Consumer Financial Protection Bureau

 P.O. Box 4503

 Iowa City, Iowa 52244

 Submit a complaint

 consumerfinance.gov/complaint

Consumer Financial

Protection Bureau