6 red flags of an investing scam, and how to check who you're dealing with

Someone offers you an investment that sounds great. How do you know if it's real? It's World Investor Week, a good moment to learn the signs. Most scams follow the same script. Once you know it, it's much easier to spot.

This guide covers six red flags, the two free tools that tell you who you're dealing with, and what to do if someone targets you.

Why scams are harder to spot now

Scams used to arrive as badly written emails. Today they can look polished. AI tools make it cheap to fake a video of a well-known person "recommending" an investment, build a copycat app, or run a chat group full of fake members cheering each other on.

The tricks change. The script mostly doesn't. Watch for these six signs.

Red flag 1: "Guaranteed" high returns

Every investment carries risk. You can lose money, including in stocks and funds on regulated platforms. So when someone promises a high return and says it's guaranteed, that's the clearest warning sign there is.

Real investment firms talk about risk. Scammers talk about certainty.

Red flag 2: Pressure to act now

"Only 24 hours left." "Spots are almost gone." "Don't tell anyone yet." Urgency is designed to stop you from thinking it over or asking someone you trust.

A real opportunity will still be there after you've taken a day to check it out.

Red flag 3: The seller isn't registered

In the US, people and firms that sell investments or give investment advice generally have to be registered. Brokers register with FINRA and the SEC or their state. Investment advisers register with the SEC or their state.

If you can't find the person or firm in the official databases (see below), stop there.

Red flag 4: You're asked to pay in gift cards, crypto, or to a person

Legitimate platforms take deposits into an account in your name, at a regulated firm. They don't ask you to buy gift cards, wire money to an individual, or send crypto to someone's wallet to "unlock" an investment.

An unusual payment method is a sign someone wants money that's hard to trace and impossible to get back.

Red flag 5: "A celebrity backs this"

A famous face in a video or ad doesn't make an investment real. Deepfake videos and fake endorsements are now common. Some even copy news-site layouts to look like coverage.

If a well-known person is "recommending" a specific investment in a random ad or DM, assume it's fake until you've verified it from their own official channels.

Red flag 6: You can't take your money out

Some scams let you "see" big gains on a dashboard, then block withdrawals, or ask for a "fee" or "tax" before you can withdraw. The balance was never real.

If you're asked to pay money to get your own money back, stop and report it.

How to check who you're dealing with

Two free tools do most of the work. It takes about five minutes.

1. Investor.gov (from the SEC). Use "Search for a professional" to look up investment advisers and brokers. It pulls from the SEC's Investment Adviser Public Disclosure (IAPD) database.
2. FINRA BrokerCheck (brokercheck.finra.org). Look up brokers and brokerage firms. You'll see whether they're registered and any disciplinary history.

Check the exact name, and make sure the website or app you're using really belongs to that firm. Scammers sometimes borrow the name of a real, registered company.

Read Also: How the US Stock Market Works: A Beginner's Guide

How Vantar shows up when you check

Vantar would rather you check us than take our word for it.

• Advice: Advisory services are provided by Gen Invest LLC, an SEC-registered investment adviser.
• Brokerage: Brokerage services are provided by Alpaca Securities LLC, member FINRA/SIPC.
• Verified accounts: Every account goes through identity checks (KYC) before it can be funded.

What SIPC does, in plain words: If a member brokerage firm fails, SIPC protects the securities and cash in customer accounts, within limits. It does not protect you from investment losses when the market goes down. You can read the details at sipc.org.

Registration doesn't mean an investment will make money. It means the firm is overseen, follows rules, and can be checked.

What to do if you're targeted

• Stop. Don't send more money, and don't share passwords or ID documents.
• Verify. Look the firm up on Investor.gov and BrokerCheck.
• Report. Send a tip to the SEC at sec.gov/tcr, and report fraud to the FTC at ReportFraud.ftc.gov. If money has left your bank, call your bank straight away.

Talk to someone you trust, too. Scammers count on you keeping it to yourself. Our learn hub has more to help you learn about investing.

The short version

Promises of guaranteed high returns, pressure, odd payment methods and blocked withdrawals are the classic signs. Before you invest anywhere, ask one question: who regulates them? Then look them up.

Ready to invest with a regulated platform? Open your Vantar account on the web and choose Trade, Auto-Invest, or both.