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An investment scam is a fraudulent scheme. It's used to trick people into making financial investments based on false information. Scammers promise high returns with little risk. But in reality, your money isn't invested at all. Instead, it's used to pay off earlier investors or goes straight into the scammer's pocket. Common types include Ponzi schemes, pyramid schemes and pump-and-dump scams. In a Ponzi scheme, returns for early investors are paid from the money of later investors. In pyramid schemes, new members must recruit others to invest. Pump-and-dump scams involve artificially inflating the price of a stock and then selling it off. These scams can be hard to recognize, as they often appear legitimate. Scammers are skilled at manipulation and persuasion. They use tactics like pressure selling, offering "inside" information, or promising unrealistic returns. To protect yourself, always research before investing. If it sounds too good to be true, it probably is. It's always better to be safe than sorry.