How to Protect Your Investments: A Complete Guide to Avoiding Financial Fraud and Stock Market Scams

Financial fraud has reached alarming levels, with the Federal Trade Commission reporting a staggering 800% increase in reported scams targeting people over 60—jumping from $55 million in 2020 to $445 million in 2024. What’s more concerning is that these are only the reported cases. When it comes to stock market scams and broader investment fraud, vigilance isn’t optional; it’s essential.

Whether you’re managing traditional investments or exploring emerging markets, the principles of financial protection remain the same. Here’s what you need to know to keep your hard-earned money safe.

Understand the Anatomy of a Financial Scam

Scammers typically exploit urgency and trust. They’ll contact you claiming there’s a critical issue with your bank account, investment portfolio, or computer system—demanding immediate action. Victims of stock market scams often report similar patterns: unsolicited contact, manufactured crisis, and pressure to act fast.

The first rule? Don’t react, react thoughtfully. When someone reaches out unexpectedly with alarming news about your finances, pause. Take a breath. Resist the urge to respond immediately. This single moment of hesitation can be the difference between losing money and staying protected.

Verify Through Official Channels, Not Their Links

Here’s a critical distinction: never use contact information provided by the person contacting you. If they claim to be from your bank, credit card company, or any financial institution, ignore any links in emails or phone numbers they supply.

Instead, pull up your statement or card and call the official number listed there. Ask for the fraud department directly. This approach eliminates the risk of connecting with fraudsters posing as legitimate institutions—a tactic commonly used in stock market scams and investment fraud schemes.

When you verify independently, you maintain control over the conversation and ensure you’re actually speaking with your financial institution.

Take Preventative Steps Against Unsolicited Contact

The National Do Not Call Registry exists specifically to reduce telemarketer harassment. While registering your number won’t stop all scammers—many operate outside legal boundaries—it does reduce the pool of targets and makes your number a less attractive target.

However, don’t rely solely on this registry. Modern scammers use spoofed numbers and digital channels to bypass traditional protections. Your phone number’s presence on the registry is one layer of defense among many.

Question Every Unexpected Caller

Scammers are master impersonators. They’ll claim to represent your bank, the FTC, Microsoft, or even law enforcement. The reality: legitimate organizations rarely cold-call you with financial emergencies or requests for account access.

Make it a personal rule: assume any unsolicited caller is not who they claim to be until proven otherwise through independent verification. This skepticism isn’t rude; it’s smart.

What Happens If You’ve Already Been Targeted

If you suspect fraud has occurred—whether through a suspicious call, email, or text—act immediately but strategically. Contact your financial institution using the phone number on your official statement. Speak with their fraud department and provide a complete account of what transpired.

Beyond that, report the incident to the FBI’s Internet Crime Complaint Center. While the FBI may not investigate individual cases, your report contributes to their broader understanding of fraud patterns, helping protect others from similar schemes.

You should also file a report with the Federal Trade Commission. Remember: being a victim of fraud isn’t shameful. Scammers continuously refine their tactics, and even cautious, informed people can be caught off guard. Don’t let embarrassment silence you—reporting increases the chances of recovery and prevents future victimization.

Share Knowledge With Your Network

Financial literacy about scams and stock market fraud isn’t just personal protection; it’s a community responsibility. Share these safeguards with family members, particularly seniors who may be more frequently targeted. The more people understand how these schemes operate, the more resilient everyone becomes against them.

Staying vigilant, asking questions, and trusting your instincts are your best defenses in an increasingly sophisticated fraud landscape. Protect your investments. Protect your peace of mind.