Stock Scams Go Social
The Securities and Exchange Commission (SEC) recently charged a man with trying to sell $500 billion worth of fake securities on the online social network LinkedIn. It’s a reminder that crime goes where the people go, and the people are on social media websites like LinkedIn and Facebook.
The SEC has advice to help you stay safe from online investment fraudsters.
- On the Internet, it’s easy for criminals to make scams that look real. Always use caution when considering an investment you found online.
- Be suspicious of unsolicited offers. If you didn’t ask for it, and you don’t know the source, there’s a good chance of bad intentions.
- The old rule about too good to be true still stands, even in new media. Compare the promised returns with the returns on well-known stock indexes. More signs of foul play include guaranteed returns and pressure to buy right now.
- Tighten your privacy settings. Fraudsters can use your private information to steal from you or scam you. “Don’t you remember me from college?”
- Is a financial service provider trying to Friend you? Feel free to say no. Friending someone can mean you let them see everything about you.
- When you’re on social media, never communicate your bank account and social security numbers. Always use firm-sponsored communication for brokers and advisers, like the telephone, letters, firm email, and the firm website.
- Affinity fraud is what the SEC calls it when the fraudster prays on what you have in common, like ethnicity or religion. Even if you know the person, check out everything first. They might have been fooled first.
- Another trick is manipulating the market with “Pump and Dump.” They’ll talk up a stock that doesn’t deserve it, then sell after everyone buys and the price is high.