An online rumor that a 193-year-old tortoise named Jonathan had died showed how scams are reaching people and increasingly snaring victims across ages and wealth levels. Last week, a post on X by someone pretending to be Jonathan’s veterinarian drew nearly 2 million views to the false claim that the Seychelles giant tortoise had passed. The real veterinarian, Joe Hollins, then took to Facebook to correct the record.
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“There is a hoax — not even an April Fool — going around,” Hollins wrote. “The hoaxer is asking for crypto donations. It’s a con.”
Crypto scams are just one tactic among many driving estimated annual fraud losses in the U.S. into the hundreds of billions of dollars. While it’s unclear whether the tortoise hoax added to that total, FINRA and consumer advocates warn that bad actors are using social media to mislead a lot of people into losing their money.
Even clients sophisticated and wealthy enough to hire a financial advisor can fall into these traps. Investors and higher-income adults participating in a poll released by FINRA’s nonprofit foundation last month failed to spot the red flags in a hypothetical sales pitch at higher rates than other respondents. In all, 63% of a representative sample of more than 1,000 adults said they would “definitely” or “probably” invest in a vehicle displaying “multiple hallmarks of fraud,” the study found — despite 71% expressing high confidence in their ability to detect financial fraud.
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FINRA Foundation
The massive extent of fraud
So it’s no surprise, then, that losses from fraud have reached staggering levels, including the Federal Trade Commission’s calculation of $196 billion in 2024 losses when adjusted for the rampant underreporting of financial crimes, according to the FINRA Foundation study.
Scammers are “adapting their tactics faster” than the industry’s many detection and prevention operations and exploiting the human behavior that leads victims to trust false claims, according to Kyrstin Ritsema, executive director of compliance services at international regulatory technology firm Confluence, which works with registered investment advisory firms, fund companies and broker-dealers.
The majority of scams these days come through social media, she noted.
“We have to start educating in the same formats that people are being scammed in,” Ritsema said. “You’re seeing something on social media, and you decide, ‘OK, I’m going to click on that.’ I just think it would be amazing to have a campaign that mimics the scam and educates at the same time.”
The FINRA Foundation study adds to a growing body of evidence highlighting retail investors’ gaps in knowledge and the scale of fraud.
A study released last month by the Consumer Federation of America found that Americans lose $119 billion to online fraud each year. That study extrapolated based on a rigorous prior Department of Justice finding that only 14% of the victims of financial crimes report incidents, applying that rate to the FBI’s tally of $16.6 billion in reported online scam losses in 2024. The IRS tracks so much fraud that, each March, it releases its annual “Dirty Dozen” list of 12 emerging tax scams targeting the public. And in January FINRA itself cited “the growing problem of fraud and financial exploitation” in proposing a new fraud prevention rule that has drawn support from the CFP Board, the National Association of Personal Financial Advisors and the Financial Planning Association.
While FINRA is facing more calls on Capitol Hill to fold it directly into the Securities and Exchange Commission, those groups praised FINRA for launching a new portal last week to help regulators and financial firms share information and coordinate against fraud threats.
“We strongly support FINRA’s efforts to enhance firms’ ability to combat financial exploitation for all customers, and especially seniors and vulnerable adults,” the organizations wrote in the joint letter to FINRA. “However, any sound policy should apply to consumers of all ages, not just to our most vulnerable. Assisting clients in times of need is a crucial aspect of financial planning.”
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Investors miss obvious red flags
Against that backdrop, the FINRA Foundation poll sheds light on how consumers think about fraud and respond to sketchy sales pitches.
The findings point to a need for education about “suspicious communications” delivered “across a wide range of consumer touchpoints” so that people encounter warnings frequently and without actively seeking them out, the study said. Researchers led by Fontes Research founder Angela Fontes, a specialist in household finance and investor decision-making,, conducted a poll of 1,004 U.S. adults last September.
Nine out of 10 respondents reported receiving some form of sketchy communication, and 14% said they had either “definitely” or “probably” lost money to fraud in the past year. The researchers asked the group whether they would invest in a product offering “a guaranteed, risk-free 25% annual return every year for the next 5 years,” which should have raised alarm bells, since “legitimate investments cannot be risk-free or promise consistently high returns over a lengthy period,” the study said. But 21% said they would “definitely” invest in the vehicle, and another 42% responded that they “probably” would do so. And, by wide margins, they had professed to be able to detect a scam.
“In fact, groups most confident in their fraud-detection abilities were among the least likely to detect the investment fraud,” the study said. Investors (75%) and consumers with at least $100,000 in annual income (79%) said they were “highly confident” that they would detect fraud. Yet 72% of investors and 74% of the higher-income consumers “missed the investment fraud red flags” in the hypothetical sales pitch, the study said.
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Consumer Federation of America
The upshot for advisory practices
The sheer amount of fraud and the evidence of consumers’ susceptibility carry direct implications for industry firms that must comply with various laws and rules designed to prevent losses, Ritsema noted. For example, the delayed rollout of a new anti-money laundering rule for RIAs “doesn’t mean that firms should not be thinking about it” and preparing for the 2028 effective date, she said. At the same time, the onslaught of social media and other online threats is complicating efforts to prevent fraud, especially transactions that are smaller than $10,000 or fully authorized by the victims themselves.
Numbers like the nearly $200 billion in annual losses estimated by the FTC also point to “how fraud changes how people interact with the markets” and reduce their trust in markets and systems in a way that is “much harder to quantify,” Ritsema said. Even amid a regulatory environment that has seen a substantial drop in enforcement cases from the Securities and Exchange Commission (and the pardoning of a convicted fraudster), RIAs and other wealth management firms must ensure they have experts and systems in place.
“The risks change, so the level of expertise and the costs associated with that is going to change,” Ritsema said. “Firms need to accept that and partner with their compliance and their information security providers to ensure that they can look a regulator in the eye and say that, ‘We genuinely believe we did everything we could, had procedures reasonably designed to prevent this.'”
