Fraudsters Targeting Investors Over Social Media

February 20, 2025 • Beginner

Bad actors are sending false information to investors in a pump and dump scheme. Read this to learn how to protect yourself by becoming familiar with the tactics and warning signs.

In a sophisticated scam, fraudsters are using social media and other channels to lure investors into "pump-and-dump" schemes. Their goal is to create a buying frenzy using false and misleading information that artificially inflates, or "pumps" up, the price of a stock. Once the price has surged, the fraudsters quickly "dump" their shares by selling them at the inflated value.

In these schemes, the stock eventually crashes, leaving unsuspecting investors who purchased at the higher price holding devalued shares—often leading to significant financial losses. We want to make sure you can recognize the signs so that you can protect yourself and your assets.

Here's how this pump-and-dump scheme works.

Fraudsters create fake social media profiles of celebrities, Schwab professionals, and other financial experts to gain credibility. They may use social messaging apps like WhatsApp, X (formerly Twitter), and Telegram, as well as lower-tech methods like text messages and phone calls. The fraudsters then lure potential investors into private investment groups where they are pressured into investing in specific securities at set times to inflate the price of these securities.

Protect yourself by becoming familiar with the tactics and warning signs.

Get-rich-quick offers. We'll never ask you to invest in specific stocks over social media or invite you to exclusive investor groups. If you receive unexpected messages urging you to invest in specific stocks through exclusive private groups, these are scams.
Stock purchase manipulation. Fraudsters may try to guide you step by step, asking you to open new brokerage accounts, buy specific stocks, and invest specific amounts. Never follow investment directions from someone you don't personally know.
Manipulative tactics and coaching. To avoid detection, fraudsters may manipulate you into initiating trades or transactions yourself. They may even provide scripts with instructions on what to say if questioned. If anyone tries to coach you into saying or doing specific things, it's a red flag.

Keeping your assets safe is our top priority.

If you receive a suspicious direct message, call, or text, please call us at 800-435-4000 (or +1-415-667-8400 if calling from outside the U.S.). We also recommend that you report any suspicious or fraudulent activity to the social media platform directly. For more information about how we keep your account information secure, please visit SchwabSafe^® or Fraud Prevention. You can get there by going to Schwab.com and then clicking on the SchwabSafe icon or by going to schwab.com/learn/topic/fraud-prevention.