The California Attorney General's Office on Monday warned consumers about a surge in sophisticated investment scams targeting users of Facebook, Instagram, and WhatsApp, as fraudsters increasingly deploy deepfake technology and unauthorized celebrity endorsements to lure victims into pump-and-dump schemes and confidence scams. The alert comes after Bonta sent a letter to Meta last year urging the company to adopt protocols to combat the pervasive issue or ban all investment advertisements on its platforms.
"Californians, we've seen an uptick in investment scams across Facebook, Instagram, and WhatsApp. These scams have cost some people their life savings and typically use photos of well-known or trusted people without their permission in order to create the necessary trust to get into consumers' pockets," said Attorney General Bonta. The schemes often feature unauthorized images of recognizable figures like Cathie Wood of Ark Invest, CNBC's Joe Kernen, or Shark Tank's Kevin O'Leary to establish credibility before moving victims to encrypted platforms.
The office identified two primary scam types plaguing social media users. In pump-and-dump schemes, victims are lured into online investment groups through fake celebrity-endorsed ads, then pressured to move conversations to WhatsApp where they receive fraudulent stock or cryptocurrency tips designed to artificially inflate prices before scammers sell at peak values, leaving victims with worthless investments. Confidence scams involve fraudsters developing long-term relationships with victims through fake investment platforms that initially show profits to build trust before ultimately draining accounts when victims attempt withdrawals.
The warning reflects growing concern among state law enforcement about social media-based financial fraud, particularly schemes involving cryptocurrency transactions that can be irreversible. Bonta's office emphasized that reputable broker-dealers and investment advisors typically do not advertise investment strategies on social media platforms, and urged consumers to verify credentials through FINRA's BrokerCheck before engaging with online investment opportunities.
The attorney general advised Californians to be wary of red flags including guaranteed returns, high-pressure tactics, celebrity endorsements, cryptocurrency demands, and requests to move conversations from Facebook to encrypted applications. "I encourage Californians to learn about common scams and review tips to protect themselves, and I urge investors to scrutinize social media investment ads before investing," Bonta said in the Monday announcement.
The office recommended consumers lock down their social media profiles, verify friend requests independently, and consult trusted legal or financial advisors before making investments. Officials also warned about secondary scams involving purported "asset recovery specialists" who target previous fraud victims with promises to retrieve lost funds for additional fees.
Californians who believe they have fallen victim to social media investment scams can file reports through the Department of Justice's online portal at oag.ca.gov/report. The alert represents part of broader state efforts to combat online financial fraud as scammers increasingly exploit social media platforms and emerging technologies to target consumers.