Scammers Target Investors through Social Media Sites
With the rise in popularity of social media sites, such as Facebook, Twitter and YouTube, many scammers are finding it easy to sell fraudulent investment scams to unwary investors. The Texas State Securities Board issued a release last September advising people to be wary of social media investments scams. “Today, crooks are increasingly logging on to find investors,” said Securities Commissioner Benette L. Zivley in the release. “Online networking and media sites make it easier to establish trust and credibility with investors, and then launch an investment scheme.”Scammers use the anonymity of these social media sites to build relationships with potential investors. The ability to access personal information such as name, birth date, interests, addresses, religious affiliation, personal photos, etc. allows scammers to personalize and target their pitch, and over time build trust with potential victims.Investors are not the only target for scammers, though. Promoters of these investment scams use online pitches to recruit people to sell illegal or inappropriate investments, as well as spread misleading and untrue information to falsely inflate the value of a stock.BBB has these tips to protect you from unscrupulous social media investment opportunities:· Be wary of unknown “friends.” If approached with an investment opportunity on a social media site, be cautious and ask questions. Don’t make any quick decisions or rush to judgment just because you are “friends” with or follow someone on a social media site.· Protect your personal information. Check your privacy settings so you can control who can see your profile and exercise good judgment when posting personal information.· Avoid high-pressured pitches. Do not feel pressured to “act now.” Take time to research any possible investment yourself. Any legitimate company will give you the time you need to make the decision best for you.· Beware of testimonials from other investors. Scam artists will frequently pay out high returns to early investors using money from later investors, otherwise known as a Ponzi scheme. Fraud aimed at groups of people with similar interests is called affinity fraud.· Confirm registration and licensing. Before investing any money, make sure the investment advisor or representative is registered and licensed. You can reference the Central Registration Depository through the U.S. Securities and Exchange Commission or the Financial Industry Regulatory Authority.To check the reliability of a company and find trustworthy businesses, visit bbb.org.
We attribute this information from Central Texas BBB.