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Online investment scams have got to be the sneakiest of all online scams. The mechanism is remarkably simple – buy a cartful of shares of penny stocks while they are still selling at rock-bottom prices; deluge the nation with faux e-mails about hot tips and lucrative deals and … that’s it! Just sit back, watch the prices soar on your computer screen and pocket a tidy profit before anybody even gets a chance to find out they’ve been gypped.
It’s the complete ‘in-your-face’ nature of the crime that makes it so audacious. All the scamster has done is sent out a couple of hundred thousand e-mails to gullible readers. He has neither robbed you outright nor has he forced you to invest in his fly-by-night scheme. There is no obvious crime committed; the only probable crime is the ‘intent to fraud’.
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| Navigating the Investment Scam Frontier |
| What makes investment scams so irresistible to engage in is the sheer ease with which an individual or a company can reach out to a global audience without having to spend a significant amount of time, money or effort. Anyone who wants to can communicate with tens of thousands of people all over the world by building a website, participating in a discussion in a ‘live’ chat room, posting a message on an internet bulletin board or by sending out mass e-mails. While it’s simple for fraudsters to make their messages and emails look credible and trustworthy, it is almost impossible for online investors to differentiate between what’s real and what’s not. |
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| Different Investment Scam Strategies |
| Here are the different ways by which investment scams can be perpetuated: |
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| Online Investment Newsletters - Several hundreds of online investment newsletters have been sent around the internet offering ‘lucky’ investors hot tips and lucrative information about featured companies and recommended stocks. While some may be genuine, most newsletters are sent by people who are paid by companies to recommend or tout their stocks. |
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| Bulletin Boards – Because users can conceal their identity behind multiple aliases, it is easy for one person to generate an illusion of widespread interest by posting several messages under different pseudonyms. Very often an ‘unbiased observer’ could turn out to be a company insider or even a large shareholder pumping up the company image by revealing ‘inside’ information about lucrative contracts or new products. |
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| E-mail Spam – The ability to reach millions of investors with a click of a button makes it easy for fraudsters to spread rumors about a company and to find investors for bogus investment schemes. E-mail spam are far more effective and have a wider reach than the older strategies of mass mailing and cold calling. Bulk e-mail programs make it even easier for spammers to send out personalized messages to countless e-mail addresses at one time. |
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| How to Avoid Internet Investment Scams? |
| Beware of claims promising quick profits at no risk – Investments are always a risky proposition and no one can predict precisely how an investment will perform. Investments that sound very promising are often the riskiest of them all. Assess your risks and do your own investigation before you invest. |
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| Watch out for messages that tell you to act immediately or lose out on the ‘next big thing’- Pressure to act immediately, whether subtle or overt, is a sure sign that something is amiss. Take your time to check out the claim. |
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| Avoid acting on testimonials from strangers – Why would a stranger want to share a ‘hot tip’ with you? Surely he’d rather help his friends and family make money; think about it. |
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