(BIVN) – The State of Hawaiʻi issued a recent warning about scammers who are increasingly using deceptive advertisements and “deepfake” technology to defraud people of their savings using online platforms. 

The Department of Commerce and Consumer Affairs Office of Consumer Protection (OCP) says the schemes are proliferating across Meta platforms, including on Facebook, Instagram and WhatsApp. “These scams include ‘pump-and-dump’ scams, confidence scams and fraudulent cryptocurrency schemes that take advantage of victims to extract as much money from them as possible,” the OCP reported. 

“Consumers should be extremely cautious of any online investment opportunity — especially those promising guaranteed returns — and take time to verify before investing,” said OCP Executive Director Mana Moriarty. 

OCP provided these detailed descriptions of some of the known scams and how they work:

How Pump-and-Dump Social Media Scams Work

In a pump-and-dump scheme, victims are lured into investment groups and convinced to invest in cryptocurrencies or low-priced stocks. The scammers advertise, hype and recommend buying the stocks or cryptocurrencies, increasing their prices and then sell when the price is high, while the victims lose their money. Pump-and-dump schemes typically follow a three-step process:

The Bait: Scam ads appear on Facebook or Instagram featuring recognizable figures, like Cathie Wood (Ark Invest), Joe Kernen (CNBC), or Kevin O’Leary (CNBC), without their permission. Other ads may feature less well-known financial advisors, also without their permission, especially those trusted by members of specific cultural or geographic communities. The ads often promise exclusive “insider” memberships or “guaranteed” high-return investment tips.

The Shift: Once a user clicks the ad, they are pressured to move the conversation to WhatsApp or other encrypted platforms such as Telegram. This allows scammers to operate away from platform moderators.

The Hook: Victims are funneled into group chats where they receive so-called “expert” advice and false testimonials. Eventually, victims are coerced into buying stocks or crypto, with the initial fraudulent tips sometimes appearing successful and generating a profit. Victims are convinced to invest large amounts in a stock or cryptocurrency, which then goes up in price and which the scammers sell off at this inflated price, leaving the victims to lose their money once the price plummets.

courtesy Hawaiʻi DCCA OCP news release

How Confidence Scams Work

In confidence scams, fraudsters develop trusting relationships with their victims and convince them to “invest” using fake investment platforms that drain the victims’ money. These scams can also follow a three-step process:

The Bait: Scammers post ads suggesting that investors can make money using an investment platform or strategy. These ads may also feature well-known figures or institutions. Once the user clicks on an ad, they may be asked to enter their contact information. Other times, they will be taken to a different website that further describes the investment strategy or platform – often resembling a news article – where they are then asked to enter their contact information.

The Investment: After the user provides their account information, they will be contacted by scammers who develop a relationship of trust and confidence with the victim. The scammers may offer to “teach” the user how to trade on a fake investing platform or even connect the victim with their own personal advisor, who will speak with the user on a daily basis. The scammers will then guide their victims to a professional-looking website or app (which is often a clone of a real trading platform). Often victims will be asked to invest a small amount at first and the app will show the investment making significant profits over the course of a few days. To prove it’s “real,” the scammers may let the victim withdraw some of the initial profit back to their bank account. Believing the platform is legitimate and having developed a close connection with the scammers who are providing the investment advice, victims will, over time, invest large amounts of money and may even take out loans from friends or family to fund their investments.

The Scam: Once the victims seek to withdraw their profits, they are told they need to pay some kind of fee, such as a commission or tax, to do so. Even if the victims pay, the scammers will find other excuses not to return the money. Once the victim stops paying these fees or making more investments, the scammers will disappear along with the victim’s investment.

courtesy Hawaiʻi DCCA OCP news release

OCP provides these tips on how to protect yourself from social media scams:

1. Identify “Red Flags”

When browsing social media sites like Facebook and Instagram and interacting with supposed investment professionals online, be highly skeptical if you see:

• Promises of guaranteed returns: No legitimate investment is “risk-free” or offers a guaranteed return.
• High-pressure tactics: Warnings that you will “miss out” or demands to invest immediately.
• Celebrity endorsements: Scammers often use AI-generated images or videos of famous entrepreneurs to lure victims.
• Cryptocurrency demands: Requests to use crypto ATMs or to send crypto to private wallets or platforms should be regarded with suspicion.
• Requests to accept other people’s money: Scammers will sometimes ask victims to accept other people’s funds in their bank accounts and convert them to cryptocurrency.
• Platform hopping: Requests to move the conversation from Facebook to encrypted apps like WhatsApp or Telegram.

2. Verify Before You Invest

Never take an ad or salesperson’s word at face value. Remember that a salesperson’s job is to be persuasive and paint a rosy picture. Conduct your own independent research:

• Verify credentials: Use FINRA’s BrokerCheck to confirm if a professional is registered. But be wary, scams may often impersonate people, firms and their credentials.
• Search for reviews: Search the name of the company or salesperson alongside words like “scam” or “complaint.”
• Check email addresses: Verify that you are communicating with a real email associated with a real advisor’s company. Remember that scammers may register email addresses that are slightly different or may change one letter from a legitimate domain.
• Look for spelling errors: Given that many scams sometimes originate overseas, ads and other communications may have spelling mistakes.
• Consult with a trusted advisor: Before investing, consult a trusted legal professional or financial advisor who can advise you if the investment is proper.
• Follow warnings from current advisors: If your bank or investment/financial advisor cautions you about your new investment, take time to further investigate the new “investment opportunity” and do not simply dismiss their concerns.
• Trust your instincts and think twice before investing: If an investment seems fishy or too good to be true, it probably is.

3. Beware of “Deepfakes” and AI

Scam ads now use sophisticated technology to mimic real people in videos or livestreams.

• Spot the fake: If a video seems slightly “off” or the audio doesn’t perfectly match the lip movements, it may be a deepfake.
• Reverse search: If you see a video of a famous figure, search for the original footage online. Fraudsters often repurpose old interviews.
• Beware of financial advice: Famous figures do not usually provide financial advice online or advertise investments in obscure cryptocurrency trading platforms.

4. Protect Your Identity and Network

Your Facebook, Instagram, and WhatsApp profiles are gold mines for scammers looking to build a relationship with you.

• Lock down your profile: Change your settings to keep your friends list, photos and posts private. This prevents scammers from seeing who you know.
• Verify friends: If a friend suddenly messages you about a “great investment opportunity,” contact them outside of Facebook via phone call or text to ensure their account hasn’t been hacked.
• Never share credentials: Do not provide login info, social security numbers, or financial details to anyone you met online.
• Do not provide strangers access to your devices: Do not allow anyone you do not know well to access your computer or mobile phone remotely to help you with your existing investment account or open a new account. Often times, scammers will pose as a representative of the company you have an account with and ask for a password or answers to the security questions and – within seconds – empty everything in your account.

Anyone who may have been a victim of these types of scams can report it to dcca.hawaii.gov. Any identifying information provided to the OCP will be protected according to law and policies on the safeguarding of identifying information, the State says.