Avoiding Internet Investment Scams

The Internet serves as an excellent tool for investors, allowing them to easily and inexpensively research investment opportunities. But the Internet is also an excellent tool for fraudsters. That's why you should always think twice before you invest your money in any opportunity you learn about through the Internet.

This alert tells you how to spot different types of Internet fraud, what the SEC is doing to fight Internet investment scams, and how to use the Internet to invest wisely.

Be Alert for Telltale Signs of Fraudulent Online Investments

  • Be wary of promises of quick profits, offers to share "inside" information, and pressure to invest before you have an opportunity to investigate.
  • Be careful of promoters who use "aliases." Pseudonyms are common on-line, and some salespeople will to try to hide their true identity. Look for other promotions by the same person.
  • Words like "guarantee," "high return," "limited offer," or "as safe as a C.D." may be a red flag. No financial investment is "risk free" and a high rate of return means greater risk.
  • Watch out for offshore scams and investment opportunities in other countries. When you send your money abroad, and something goes wrong, it's more difficult to find out what happened and to locate your money.
  • If a company is not registered or has not filed a "Form D" with the SEC, visit the website of the North American Securities Administrators Association to find your state securities administrator.