The attorney general's office warned that scammers are increasingly using deceptive advertisements and "deepfake" technology across Facebook, Instagram, and WhatsApp to lure investors into pump and dump schemes, confidence scams, and fraudulent cryptocurrency schemes. The alert comes as New Yorkers have reported losing significant amounts of money through these platforms, with individual losses ranging from $25,000 to over $1.3 million.
According to the alert, the schemes exploit recognizable figures including Cathie Wood of Ark Invest, CNBC's Joe Kernen, and Shark Tank's Kevin O'Leary without their permission. "From fake investment platforms to deepfake celebrity endorsements to fraudulent cryptocurrencies, these schemes are becoming more sophisticated," said Attorney General James. The office noted that most reputable broker-dealers and investment advisors do not post specific investment advice on social media platforms.
The pump and dump schemes typically follow a three-step process: fraudulent ads featuring celebrities appear on Facebook or Instagram, users are then pressured to move conversations to encrypted platforms like WhatsApp, and victims are funneled into group chats where they receive false investment advice and testimonials. In confidence scams, fraudsters develop trusting relationships with victims and convince them to invest using fake trading platforms that eventually drain their accounts.
The alert detailed several cases of New York victims, including a 46-year-old former IT consultant from New Hyde Park who lost more than $1.3 million after clicking on a fraudulent Facebook ad falsely featuring Bank of America's Savita Subramanian. The scam drained nearly all her savings, including college tuition money for her two children, and the resulting anxiety caused her to lose her job.
"I urge everyone to remain vigilant, be skeptical of any social media investment ads and remember: if an investment sounds too good to be true, it is probably a scam," said Attorney General James. "Any suspicious ads or offers should be reported to my office." The office emphasized that fraudulent transactions, especially those involving cryptocurrency, are typically irreversible.
The attorney general's office provided extensive guidance for identifying red flags, including promises of guaranteed returns, high-pressure tactics, celebrity endorsements, and requests to move conversations to encrypted platforms. The office recommended using FINRA's BrokerCheck to verify credentials and conducting independent research before making any investments.
New Yorkers who believe they have been victims of these scams are encouraged to report to the attorney general's office online or by calling 1-800-771-7755. The alert also warned against purported asset recovery specialists who may contact victims promising to retrieve lost funds for a fee, noting that some may be additional scammers taking advantage of the situation.