Fraud Education and Prevention Articles

Ramp-and-Dump Scams Are Surging — Here’s How They Work

Oct 03, 2025

Utah college professor Braden Lindstrom was new to investing when he saw a social media ad for an online investment club.1 Lindstrom followed the ad to a WhatsApp group where an apparent financial adviser told members about a small Chinese shipping company that was about to be acquired, after which its stock price would skyrocket. This seemed reasonable because the company's stock had been steadily rising in recent months. 

It only took a few days after Lindstrom invested $82,000 in the "opportunity" for the company's stock to crash by 96%, taking Lindstrom's savings with it.

"It just kind of puts a dent in your faith in human nature," Lindstrom told the Wall Street Journal. 

This financially devastating fraud is called a "ramp-and-dump" investment scam, a relatively new twist on the more familiar "pump-and-dump" scam.2 The new strategy is effective. Just days prior to Lindstrom's ordeal, the FBI seized $214 million and seven people were indicted in another ramp-and-dump scam in Chicago.3 In early July 2025, the FBI reported an at least 300% increase in victim complaints of ramp-and-dump stock fraud from 2024.2

Investors, beware. Here's what everyone looking for investment opportunities should know about ramp-and-dump scams and how to avoid them.


How Ramp-and-Dump Scams Work

The difference between a traditional pump-and-dump scam and a ramp-and-dump scam may seem minor, but it's significant.4 A pump-and-dump scam is all about persuasion — hyping up a stock to encourage lots of real investment before the scammers cash out. Ramp-and-dump uses bots or fake investment accounts to actually ramp up the stock price over time, lending credibility to the investment opportunity and allowing the scammers to rely less on speculative hype to persuade victims to invest. 

Here's how it typically works:1 2 4

  • A victim is contacted one of two ways:
    • They may see an ad on social media for an online investment club.

    • They receive a seemingly accidental text message from someone trying to reach a friend. The stranger strikes up a conversation and eventually offers investment advice or invites the victim to join an investment club.

  • The victim joins the investment club, which is often hosted on a secure messaging app, like WhatsApp. Some members are victims, others are bots or otherwise fraudulent accounts.

  • Unbeknownst to the victims, the scammers control a large volume of a low-priced stock by owning it themselves or purchasing it through bots and other fraudulent accounts — and have inflated its price over several weeks or months.

  • Investment club members receive a supposedly exclusive investment tip for the inflated stock. Club members are urged to act quickly before a market-moving event, like an acquisition, company breakthrough, a new technology, or government action.

  • After the victims invest, further raising the stock price as high as the scammers think it will go, the scammers sell off their shares for maximum profit, crashing the stock.
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In early July 2025, the FBI reported an at least 300% increase in victim complaints of ramp-and-dump stock fraud from 2024.

Innovating on the classic pump-and-dump investment scam has been a savvy move for scammers, as investment fraud is consistently the most lucrative cybercrime reported to the FBI year after year. Victims reported $6.5 billion in investment fraud losses in 2024, well over double that of the next highest fraud loss category.5


How to Protect Yourself From Ramp-and-Dump Scams

Investment scams are vicious because of how large the losses can be. Like Lindstrom's $80,000 loss, victims often lose a large chunk — if not all — of their life savings. That pain is felt across a wide demographic range, as the number of victim reports to the FBI remains fairly consistent among all age groups above age 30.5

Here's what investors can do to avoid falling victim to a ramp-and-dump scam.4

  • Never respond to someone who texts you from an unknown number, even if it seems like an innocent mistake.

  • If someone offers you a financial benefit for sharing investment information with others, consider it highly suspicious.

  • Before investing in a newly issued small-cap stock, do your own research to find out who has underwritten the IPO, where the company is based, and if there are any foreign affiliates. Consider all non-U.S. small-cap companies underwritten by foreign broker-dealers to be very high risk.

  • Resist pressure to act quickly ahead of a market-moving event.6

  • Make sure an investment professional or company is licensed or registered on Investor.gov.7

  • Avoid putting money into any financial investments not registered with the SEC, which should generally be the case with legitimate investments. You can check the SEC’s EDGAR database and your state securities regulator to get information about the company and the people promoting it.8 9

  • Run all investment opportunities by a known, trusted financial advisor. If you don't have one, establish a relationship with one — in person — and ask their advice.

What To Do If You Are a Victim of Investment Fraud

Few frauds are more damaging — financially or emotionally — than any type of investment fraud. The median investment fraud loss reported to the Federal Trade Commission in 2024 was $9,300: far and away the highest of all fraud categories.10

The Financial Industry Regulatory Authority, or FINRA, urges victims to practice self-compassion and forgive themselves, as scammers are master manipulators.11 Feelings of grief, shame, anger and depression, the organization says, are common among victims. FINRA's partnership with the mental health organization Give an Hour offers victims resources to navigate their emotional recovery, including counseling.12 13

As with any fraud, file a report with both the FTC and the FBI's Internet Crime Complaint Center.14 15 To further protect yourself and your finances from harm, follow the steps outlined in our article, "What to Do if You Are a Victim of Fraud."

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Important disclosure information

Asset allocation and diversifications do not ensure against loss. This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

  1. Dave Michaels, "Obscure Chinese Stock Scams Dupe American Investors by the Thousands," The Wall Street Journal, published June 16, 2025. Accessed September 26, 2025. Back
  2. Federal Bureau of Investigation, "Fraudsters Target US Stock Investors through Investment Clubs Accessed on Social Media and Messaging Applications," FBI Public Service Announcement, published July 3, 2025. Accessed September 26, 2025. Back
  3. Liz Nagy, et al., "7 indicted in massive 'ramp-and-dump' investment fraud scheme; $214M in stolen assets seized: FBI," ABC 7 Eyewitness News, published March 24, 2025. Accessed September 26, 2025. Back
  4. Financial Industry Regulatory Authority, "This On-Ramp Could Lead You to a Dump," published March 30, 2023. Accessed September 26, 2025. Back
  5. Federal Bureau of Investigation, "Internet Crime Report 2024," FBI Internet Crime Complaint Center, published April 23, 2025, accessed August 18, 2025. Back
  6. Federal Trade Commission, "Investment Scams," FTC Consumer Advice, published December 2023. Accessed September 26, 2025. Back
  7. U.S. Securities and Exchange Commission, "Investor.gov," accessed September 25, 2025. Back
  8. U.S. Securities and Exchange Commission, "Using EDGAR to Research Investments," accessed September 25, 2025. Back
  9. U.S. Securities and Exchange Commission, "State Securities Regulators," accessed September 25, 2025. Back
  10. Federal Trade Commission, "Fraud Reports," Tableau Public, published August 15, 2025. Accessed September 26, 2025. Back
  11. FINRA Investor Education Foundation, "It's Not Your Fault: Empowerment After Financial Fraud," published March 2024. Accessed September 26, 2025. Back
  12. FINRA Investor Education Foundation and Give An Hour, "Financial Fraud Victim Journey Map," accessed September 25, 2025. Back
  13. Give An Hour, "Support After Financial Fraud," accessed September 25, 2025. Back
  14. Federal Trade Commission, "Report Fraud," accessed September 25, 2025. Back
  15. FBI, "File a Complaint," Internet Crime Complaint Center. Accessed September 25, 2025. Back