Scams: Pump-and-Dumps, Fake Gurus, and Deepfakes

Why this matters

Investment fraud was the costliest type of internet crime reported to the FBI in 2025, with about $8.6 billion in reported losses, out of nearly $21 billion across all types.¹ The tactics change as technology does, but the basic patterns don't. Learning them once protects you, and the people around you, for years.

Pump-and-dumps

In a pump-and-dump, promoters push up the price of a stock by spreading positive but false information, usually online through ads, fake news coverage, or social media. The hype draws in buyers and the price rises. Then the promoters sell their own shares before the hype ends, the price drops, and the remaining investors lose most of their money. Microcap stocks, the low-priced shares of the smallest companies, are especially vulnerable, because there's often little public information about them to contradict the story.²

All numbers are hypothetical.

Stage	Share price	What's happening
Setup	$0.20	Promoters quietly buy 2 million shares of a tiny company.
Pump	$0.20 to $1.50	Posts, paid promotions, and fake news claim a breakthrough. New buyers pile in.
Dump	About $1.40	Promoters sell everything, turning $400,000 into about $2.8 million.
Collapse	$0.10	The buying stops and the price falls.

Someone who bought at $1.20 during the hype has lost about 92%. The promoters' profit came directly from the late buyers.

Fake gurus and investing group chats

The SEC warns that fraudsters use investing group chats, often reached through social media ads, to draw people into scams. A chat may claim to be led by a well-known expert who is being impersonated, sometimes with deepfake video, or by someone who doesn't exist. Members are steered to an app or website where their account shows growing "profits." When they try to withdraw, they're told to pay a fee, a tax, or a deposit first, or are falsely told the SEC is freezing the account. After they pay, the contact stops and the money is gone.³

In one case the SEC describes, investment "clubs" on a messaging app each had a "professor" posting market commentary and an "assistant" handling members, and they promoted trade recommendations supposedly based on AI signals. Members posted screenshots of supposedly successful trades. Investors were directed to platforms falsely claiming regulatory licenses, then charged bogus fees to withdraw.³

The rest of this lesson is for members

Still to come in this lesson: Deepfakes and impersonation, The red flags they share, Protecting yourself, the key takeaways, and 2 quiz questions with explanations.

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