CONSUMER ALERT: Attorney General Mayes Warns Arizonans of Investment Scams on Meta Platforms

PHOENIX – Attorney General Mayes today issued a consumer alert to warn Arizonans about the prevalence of fraudulent investment schemes proliferating across Meta platforms, including on Facebook, Instagram, and WhatsApp. Scammers are increasingly using deceptive advertisements and "deepfake" technology to lure investors into high-stakes scams to defraud them of their savings. 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.

Attorney General Mayes is providing tips for Arizonans to protect themselves from scams and urging every investor to carefully scrutinize social media investment advertisements before investing.

Most reputable broker-dealers and investment advisors do not post specific investment advice on social media platforms. Attorney General Mayes encourages anyone who may have been a victim of these types of scams to report it at www.azag.gov/consumer.

"These scammers deliberately target our most vulnerable communities, using trusted faces and false promises to rob Arizonans of their money,' said Attorney General Mayes. "Meta must do more to protect users on its platforms. If you believe you have been a victim of consumer fraud, report it to my office immediately."

AG Mayes was one of 42 state and territorial attorneys general who sent a letter to Meta last year urging the company to take action against these scam ads.

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:

1. The Bait: Scam ads appear on Facebook or Instagram featuring recognizable figures, like Cathie Wood (Ark Invest), Joe Kernen (CNBC), or Kevin O'Leary (Shark Tank), 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.
2. 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.
3. 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.