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An investment scam is a deceptive practice. It's designed to trick people into investing their money with the promise of high returns. These scams often appear legitimate and can be very persuasive. They use a variety of tactics to lure potential victims. One common type of investment scam is a Ponzi scheme. The scammer promises high returns with little risk. They use money from new investors to pay returns to earlier investors. This creates the illusion of a profitable investment. The scheme collapses when there aren't enough new investors to pay the old ones. Another type of scam is the pump and dump scheme. Scammers inflate the price of a stock they own by spreading false information. Once the price is high enough, they sell their shares and the price crashes. Investors who bought in at the inflated price lose money. It's important to be cautious when investing. Always research the investment and the person or company offering it. If it sounds too good to be true, it probably is.